EVRG Q1 2025: EPS $3.97 misses by $0.05; 1.3GW data center pipeline
- Resilient EPS Execution: Management acknowledged a $0.05 gap in their base adjusted EPS (i.e. $3.97 vs. the guidance midpoint of $4.02 per share) and is actively taking mitigating actions to close this gap, reflecting disciplined execution.
- Robust Customer Pipeline and Load Growth: The Q&A highlighted a strong pipeline—with 1.3 gigawatts in large data center projects and 300 megawatts already transitioning into execution—and discussions indicating potential load growth as early as Q3–Q4, supporting future revenue expansion.
- Effective Cost Management and Operational Flexibility: Executives emphasized the ability to leverage O&M cost reduction levers to effectively manage expense and safeguard margins, underscoring operational flexibility that can help sustain profitability through varying market conditions.
- Underperformance in Q1: The call noted an adjusted earnings shortfall of $0.05 per share below expectations, suggesting pressure on achieving full-year targets if mitigating actions do not materialize as planned.
- Potential Future Equity Dilution: While there’s no dilution expected in 2025, management highlighted the option of issuing equity in 2026-2027 to support capital needs, which introduces a risk of dilution for current shareholders.
- Dependence on Uncertain Mitigating Actions: The reliance on active discussions and measures to recover the $0.05 delta introduces uncertainty; if these actions fall short, it may indicate underlying operational challenges impacting future performance.
| Metric | YoY Change | Reason |
|---|---|---|
Operating Cash Flow | +41.7% (from $317.3M in Q1 2024 to $449.6M in Q1 2025) | The substantial increase in operating cash flow suggests improved operational performance over the previous period, potentially due to enhanced revenue generation and better working capital management relative to Q1 2024. |
Short-term Debt, Net | Changed from $139.7M (positive) in Q1 2024 to –$264.0M in Q1 2025 | The reversal in short-term debt indicates a significant reduction in short-term liabilities. This likely results from active refinancing or debt repayment strategies that contrast with the previous period’s higher liability level. |
Total Equity | +209% (from $3,225.6M in Q1 2024 to $9,967.9M in Q1 2025) | The dramatic surge in Total Equity suggests a major capital infusion, asset revaluation, or other financial adjustments compared to Q1 2024. While specific drivers are not detailed, the jump reflects a significant change in the financial structure. |
Income Tax Expense | +31.5% (from $7.3M in Q1 2024 to $9.6M in Q1 2025) | The rise in income tax expense, despite nearly flat net income, hints at adjustments in deferred tax calculations or changes in taxable income, marking a shift in tax liabilities relative to Q1 2024. |
Net Income | Relatively flat (from $122.7M in Q1 2024 to $125.0M in Q1 2025) | Stable net income suggests that despite significant changes in cash flow, debt, and equity accounts, underlying profitability remained consistent. This stability contrasts with the volatility in other metrics from the previous period. |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Customer Pipeline and Load Growth | Consistently discussed across Q2 2024 (active dialogue with new customers ), Q3 2024 (6+ gigawatts pipeline and detailed stages ), and Q4 2024 (pipeline expansion from 6 GW to over 11 GW with detailed categories ) | Q1 2025 detailed a robust pipeline broken into clear categories (actively building, finalizing agreements, advanced discussions, and initial conversations), with updates on gigawatt additions and timing for load ramps | Consistent focus with expanding pipeline capacity and more granular categorization in Q1 2025, reinforcing a very positive growth outlook. |
Capital Expenditure and Infrastructure Investment | Addressed in Q2 2024 with a $12.5 billion 5‐year plan , in Q3 2024 with an updated forecast showing increased incremental investments and rate base growth , and in Q4 2024 with details on a $2.3 billion year‐long infrastructure spend and an expanded 5‐year capital plan | Q1 2025 emphasized the strategic focus on infrastructure investments—with discussion of higher depreciation/interest impact on EPS and tying investment to future growth, although without new numeric updates—underscoring its critical role in supporting long‐term customer and regional growth | Continuity with incremental increases. The topic remains central with consistent strategic emphasis, though Q1 2025 focuses more on the strategic impact rather than detailed figures. |
Equity Financing and Dilution Risk | Q3 2024 detailed the timing for equity issuances starting in 2026 and a conservative funding approach. Q2 2024 and Q4 2024 did not include any specific discussion. | Q1 2025 highlighted that any potential equity issuance would settle in 2026/2027, ensuring no dilution in 2025 while noting sizable equity needs later—emphasizing that stronger load growth could reduce future equity issuance needs | New emphasis emerging in Q1 2025. While previously discussed only in Q3 2024, Q1 2025 reiterates and clarifies the timing, showing an increased focus on mitigating dilution risk. |
Regulatory and Rate Case Uncertainty | Consistently addressed in Q2 2024 (legislative support with House Bill 2527, pending Missouri cases, and planned workshops ), Q3 2024 (capital structure workshop and upcoming rate case filings ), and Q4 2024 (detailed procedural schedules and predetermination requests ) | Q1 2025 provided detailed updates on the Kansas Central rate case (with precise dates for intervenor testimony, settlement conferences, and hearings) as well as pending requests in Missouri, emphasizing a proactive approach in managing regulatory processes | Steady focus. The topic is addressed in every period with increasing clarity in Q1 2025—detailed timelines and active management of regulatory proceedings reinforce its importance to future outcomes. |
EPS Execution and Operational Performance | Q2 2024 outlined solid adjusted EPS performance along with effective storm restoration efforts ; Q3 2024 detailed improved EPS figures and operational resilience with clear EPS guidance | Q1 2025 reported Q1 adjusted EPS at $0.54 per share (consistent with Q1 2024) and detailed operational performance against weather challenges, while reaffirming the 2025 EPS guidance and long-term growth targets | Consistent performance focus. Across periods, there is clear messaging on EPS execution and operational reliability, with Q1 2025 affirming targets despite weather challenges. |
Emerging Renewable Energy Investments and Grid Modernization | Discussed in Q2 2024 (as part of the IRP and fleet transition strategy ), Q3 2024 (renewables investments such as new hydrogen-enabled natural gas plants and solar farms, alongside grid modernization efforts ), and Q4 2024 (capital investment in grid modernization and new energy facilities ) | Not mentioned in Q1 2025 earnings call | Topic dropped in the current period. Whereas earlier periods integrated discussion on renewables and grid modernization as part of broader strategic investments, Q1 2025 did not address this topic. |
Execution Timing and Growth Target Variability | Q2 2024 described steady execution timing with reaffirmed long-term EPS growth targets ; Q3 2024 provided clarity on execution cadence and targeting the top half of the 4%–6% growth range ; Q4 2024 reiterated economic development timelines and growth expectations based on pipeline achievements | Q1 2025 detailed contract execution timing for 1.3 GW of projects (targeting announcement around end of Q3/early Q4 2025) and reaffirmed the long-term EPS growth target of 4%–6% from a 2025 baseline | Consistent messaging with increased precision. Execution timing now includes more specific milestones, providing investors with clear timelines and enhancing confidence in meeting growth targets. |
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EPS Guidance
Q: Why is Q1 EPS $0.05 below guidance?
A: Management reported a $3.97 base EPS—$0.05 lower than the $4.02 target—but they expect mitigating actions to fully hit guidance by year-end. -
Equity Issuance Timing
Q: Will equity be issued now or later?
A: Management confirmed they are not planning any new equity issuance in 2025; any market activity will settle starting 2026, ensuring no dilution this year. -
Equity Sensitivity
Q: How does sales growth affect equity needs?
A: Although not quantified precisely, stronger load growth—from 2-3% to potentially 4-5%—could lower equity needs by hundreds of millions over the five‐year forecast. -
IRP Load Integration
Q: Does the IRP include additional load?
A: The latest IRP filings already incorporate large new customers in both actively building and finalizing categories, flexing retirements and possible conversions to natural gas. -
Contract Timeline
Q: When will construction contracts finalize?
A: The 300-MW move into execution is expected to see contracts signed around the end of Q3 to Q4, linked to concluding tariff proceedings. -
Residential Demand Dynamics
Q: Why did weather-adjusted residential demand drop?
A: Despite an 8% raw increase, block pricing in winter caused a 3% decline on a weather-adjusted basis, even as overall residential activity remains robust. -
Coal Retirement Timing
Q: What drove the decision to delay coal retirements?
A: Management delayed retirements considering unit age, retrofit costs, and spare parts scarcity, maintaining flexibility under evolving regulations. -
O&M Flexibility
Q: What levers will sustain O&M targets?
A: A range of discretionary spending adjustments and cost management measures are in place to help meet annual EPS targets without compromising reliability. -
Large Load Tariffs
Q: How critical are large load tariff disclosures?
A: Tariff proceedings engage multiple stakeholders to ensure competitive rates and enable new data center customers while spreading fixed costs, enhancing overall market appeal.
Research analysts covering Evergy.