# Evergy (EVRG) Financial Model Free Excel 3-statement financial model and company analysis for Evergy. - Canonical: https://finamodel.com/companies/evergy - Industry: Utilities - Downloadable model: Yes - Excel download: https://finamodel.com/company-models/EVRG.xlsx ## Model Purpose This model evaluates Evergy's equity valuation and dividend sustainability by projecting its rate base growth, regulatory recovery lag, and massive capital expenditure programme to determine if the company can achieve its targeted 6-8% annual EPS growth. ## Company Overview Evergy, Inc. is a regulated electric utility company that generates, transmits, and distributes electricity to approximately 1.7 million customers across Kansas and Missouri. The company operates primarily as a single reportable segment (Regulated Electric Utility) but tracks its operating revenues across distinct customer classes. * **Business segments**: Residential (approx. 35% of retail revenue), Commercial (approx. 34%), Industrial (approx. 12%), Wholesale and Transmission (approx. 15%), and Other (approx. 4%). * **Key geographies**: Kansas and Missouri. * **Business model type**: Asset-heavy, rate-regulated monopoly. Returns are driven by the allowed Return on Equity (ROE) on its rate base, as determined by the Kansas Corporation Commission (KCC) and the Missouri Public Service Commission (MPSC). * **Competitive position**: Operates as a monopoly in its franchised service territories, participating in the Southwest Power Pool (SPP) for wholesale generation and transmission. * **Recent major events**: In 2025, regulators approved a Kansas rate settlement adding $128 million in annual retail revenues. The company also introduced a massive $21.6 billion capital investment plan for 2026 to 2030 and initiated the disposal of non-regulated early-stage clean energy investments after recording impairment losses. ## Revenue Deep Dive * **Residential** * *Revenue driver formula*: Residential Customers x Weather-Normalised Usage per Customer x Average Rate per kWh * *Historical growth rate*: 1-3% CAGR (highly weather dependent) * *Key growth levers and headwinds*: Population growth in suburban Kansas City, energy efficiency initiatives reducing per-capita usage, and extreme weather events (cooling/heating degree days). * *Pricing dynamics*: Regulated retail rates set by state commissions. * *Revenue recognition notes*: Recognised over time as electricity is delivered; includes unbilled revenue estimates at month-end. * *Seasonality*: Strongest in Q3 (summer cooling) and Q1 (winter heating). * **Commercial** * *Revenue driver formula*: Commercial Customers x Usage x Average Rate per kWh * *Historical growth rate*: 2-4% CAGR * *Key growth levers and headwinds*: Local economic expansion, return-to-office trends, and new data centre developments. * *Pricing dynamics*: Regulated tariff structures, often including demand charges. * *Revenue recognition notes*: Recognised as electricity is delivered. * *Seasonality*: Peaks in summer but generally smoother than residential. * **Industrial** * *Revenue driver formula*: Industrial Customers x Usage x Average Rate per kWh * *Historical growth rate*: 1-2% CAGR * *Key growth levers and headwinds*: Manufacturing activity, large customer expansion projects (e.g., Panasonic battery plant in Kansas). * *Pricing dynamics*: Long-term regulated contracts, often with special economic development riders. * *Revenue recognition notes*: Recognised as delivered. * *Seasonality*: Least seasonal of the retail classes; driven by production schedules. * **Wholesale** * *Revenue driver formula*: Wholesale MWh Sold x SPP Market Price * *Historical growth rate*: Highly volatile (depends on excess generation and market clearing prices) * *Key growth levers and headwinds*: Plant availability, natural gas prices setting the marginal clearing price in SPP. * *Pricing dynamics*: Spot market pricing within the SPP. * *Revenue recognition notes*: Recognised upon delivery to the grid. * *Seasonality*: Highest during extreme weather events when grid demand peaks. * **Transmission** * *Revenue driver formula*: FERC-Regulated Transmission Rate Base x Allowed Return * *Historical growth rate*: 6-8% CAGR * *Key growth levers and headwinds*: Grid modernisation investments and renewable energy integration requiring new transmission lines. * *Pricing dynamics*: Formula rates regulated by the Federal Energy Regulatory Commission (FERC). * *Revenue recognition notes*: Recognised based on annual revenue requirements. * *Seasonality*: Minimal seasonality. ## Cost Structure ### Variable Costs / COGS * **Line-by-line breakdown**: Fuel and purchased power, SPP network transmission costs. * **Gross margin range**: Utility Gross Margin (Revenues less Fuel and SPP costs) typically ranges from 60% to 65%. * **Key input costs and commodity exposures**: Coal, natural gas, and nuclear fuel. Fuel costs are generally passed through to customers via fuel adjustment clauses, mitigating direct margin exposure but impacting customer affordability. * **How COGS scales with revenue**: Highly linear with generation volume, though pass-through mechanisms mean revenue and COGS often move in tandem without impacting gross profit dollars. ### Operating Expenses * **Operating and maintenance (O&M)**: Typically 18-22% of revenue. Covers labour, routine plant maintenance, vegetation management, and corporate overhead. * **Depreciation and amortisation**: Typically 20-22% of revenue. Highly capital-intensive business means D&A is a massive, growing expense as the rate base expands. * **Taxes other than income tax**: Typically 7-9% of revenue. Primarily property taxes on infrastructure and franchise fees. * **Restructuring / one-time charges**: Occasional impairments related to non-regulated investments (e.g., $48.7 million in 2025 for early-stage clean energy investments) or executive realignment costs. ### Margin Profile * **Gross margin**: 60-65% (Utility Gross Margin) * **EBITDA margin**: 38-42% * **Operating margin**: 16-20% * **Net margin**: 12-15% * **Margin trend**: Operating margins are facing pressure from rising depreciation and interest expenses tied to the heavy capital investment cycle, offset by periodic rate case relief. ## Balance Sheet Structure * **Total assets**: Approximately $26.3 billion. * **Key asset categories**: Property, Plant and Equipment (PP&E) is the dominant asset class (~$18.8 billion net). Regulatory assets (~$1.8 billion) represent deferred costs approved for future recovery. * **Goodwill & intangibles**: Approximately $2.3 billion, stemming from the Great Plains Energy and Westar Energy merger that formed Evergy. * **Working capital profile**: * *Days Sales Outstanding (DSO)*: 30-40 days. * *Days Inventory Outstanding (DIO)*: 40-50 days (primarily fuel inventory and supplies). * *Days Payable Outstanding (DPO)*: 35-45 days. * *Net working capital as % of revenue*: Typically negative or near zero. * *Is working capital positive or negative?* Utilities often run with negative working capital, relying on continuous cash generation and short-term debt to fund operations. * **PP&E**: Consists of generation plants (coal, natural gas, nuclear, wind, solar), transmission lines, and distribution networks. Useful lives range from 10 to 60 years. * **Right-of-use assets / operating leases**: Immaterial relative to owned infrastructure. ## Capital Expenditure & Investment * **Capex as % of revenue**: 45-50% (extremely high due to the $21.6 billion 2026-2030 investment plan). * **Maintenance capex vs. growth capex**: Approximately 40% maintenance (replacing aging infrastructure) and 60% growth (new generation, grid modernisation). * **Major capex programmes underway**: Construction of two 705 MW combined-cycle natural gas plants, one 440 MW simple-cycle unit, and large solar projects (Kansas Sky, Sunflower Sky, Foxtrot) targeting in-service dates between 2027 and 2030. * **Capitalised software / development costs**: Immaterial compared to hard infrastructure. * **M&A pattern**: Organic grower currently. The company was formed via a transformational merger in 2018 but is now focused entirely on internal rate base growth. ## Debt & Capital Structure * **Total debt**: Approximately $11.5 billion to $12.5 billion. * **Debt/EBITDA ratio**: Typically 4.5x to 5.5x. * **Credit rating**: Investment grade (typically Baa2/BBB or similar). * **Key debt instruments**: First mortgage bonds, unsecured notes, commercial paper, and a master credit facility. * **Maturity profile**: Laddered maturities with frequent refinancing due to continuous capital needs. * **Interest rate profile**: Predominantly fixed-rate long-term bonds, with floating-rate exposure on commercial paper and revolving credit facilities. * **Covenants**: Standard debt-to-capitalisation limits (typically must remain below 65%). * **Share repurchase programme**: Inactive. The company is more likely to issue equity to fund its massive capex programme than to buy back shares. * **Dividend policy**: Quarterly dividend of $0.6950 per share ($2.78 annualised in 2026), targeting a payout ratio of 60-70% of adjusted earnings. ## Cash Flow Characteristics * **Operating cash flow conversion**: OCF / Net Income is typically 1.8x to 2.2x due to massive depreciation add-backs. * **Free cash flow margin**: Consistently negative. The company outspends its operating cash flow on capital expenditures by a wide margin. * **Major non-cash items**: Depreciation and amortisation, deferred income taxes, and unrealised losses on investments. * **Working capital cash flow impact**: Generally a minor source or use of cash; the dominant cash flow drivers are capex and debt issuance. * **Capex intensity**: Extremely high. 2025 capex was $2.8 billion against $1.7 billion in operating cash flow. * **Cash tax rate vs. GAAP effective tax rate**: Cash taxes are minimal due to accelerated depreciation for tax purposes and the utilisation of production tax credits (PTCs) from wind generation. ## Sheet Structure 1. **Assumptions**: Hardcoded drivers for customer growth, usage, rate case outcomes, allowed ROE, capex schedule, and financing costs. 2. **Revenue Build**: Detailed projection of Residential, Commercial, Industrial, Other Retail, Wholesale, and Transmission revenues based on volume and rate assumptions. 3. **Rate Base & Capex Schedule**: Roll-forward of gross PP&E, accumulated depreciation, Construction Work in Progress (CWIP), and regulatory assets to calculate the ending rate base. 4. **Income Statement**: Consolidated statement from Total Revenues down to Net Income and EPS, mirroring the 10-K layout (separating Fuel, SPP costs, O&M, D&A, and Taxes other than income). 5. **Balance Sheet**: Assets, Liabilities, and Shareholders' Equity, with specific lines for Regulatory Assets, Regulatory Liabilities, and Fuel Inventory. 6. **Cash Flow Statement**: Operating, Investing, and Financing cash flows, highlighting the massive capex outflows and corresponding debt/equity inflows. 7. **Debt & Interest Schedule**: Tranches of short-term and long-term debt, calculating interest expense and tracking the debt-to-capitalisation ratio. 8. **Equity & Dividend Schedule**: Share count roll-forward, equity issuance requirements to fund the capex shortfall, and dividend payments. 9. **DCF Valuation**: Unlevered free cash flow calculation, WACC derivation, and terminal value based on long-term rate base growth. ## Key Financial Relationships 1. `Residential Revenue = Residential Customers * Weather-Normalised MWh per Customer * Average Residential Rate per MWh` 2. `Fuel and Purchased Power Expense = Total MWh Generated & Purchased * Average Fuel Cost per MWh` 3. `Utility Gross Margin = Total Revenues - Fuel and Purchased Power - SPP Network Transmission Costs` 4. `Ending Gross PP&E = Beginning Gross PP&E + Capital Expenditures - Retirements` 5. `Ending Accumulated Depreciation = Beginning Accumulated Depreciation + D&A Expense - Retirements` 6. `Average Rate Base = (Beginning Net PP&E + Ending Net PP&E) / 2 + Regulatory Assets - Deferred Income Taxes` 7. `Operating Income = Utility Gross Margin - Operating and Maintenance Expense - Depreciation and Amortisation - Taxes Other Than Income Tax` 8. `Interest Expense = Average Total Debt * Weighted Average Interest Rate` 9. `External Financing Requirement = Capital Expenditures + Dividends Paid - Operating Cash Flow` 10. `EPS = Net Income Attributable to Evergy / Weighted Average Diluted Shares Outstanding` 11. `Dividends Paid = Dividend per Share * Shares Outstanding` ## Cross-Sheet Dependencies * The **Assumptions** sheet dictates the **Revenue Build** and **Rate Base & Capex Schedule**. * The **Revenue Build** feeds the top line of the **Income Statement**. * The **Rate Base & Capex Schedule** drives Depreciation on the **Income Statement** and Capital Expenditures on the **Cash Flow Statement**. * The **Income Statement** provides Net Income to the **Cash Flow Statement** and Retained Earnings to the **Balance Sheet**. * The **Cash Flow Statement** calculates the External Financing Requirement, which feeds the **Debt & Interest Schedule** and **Equity & Dividend Schedule**. * The **Debt & Interest Schedule** feeds Interest Expense back to the **Income Statement**, creating a circular reference that requires a toggle switch. ## Sign Convention * Revenues, Assets, and Equity are positive. * Expenses are positive in their specific build schedules but subtracted in the Income Statement to calculate profit margins. * On the Cash Flow Statement, cash inflows (e.g., Net Income, Depreciation, Debt Issuance) are positive, while cash outflows (e.g., Capital Expenditures, Dividends Paid, Debt Repayment) are negative. ## Things Most Likely to Go Wrong * Failing to model regulatory lag: The company projects 11.5% rate base growth but only 6-8% EPS growth because of the delay between spending capital and recovering it in customer rates. * Ignoring weather impacts: Using unadjusted historical revenue will skew forecasts. The model must assume normal weather (average cooling/heating degree days) going forward. * Mishandling SPP Transmission costs: These are pass-through costs that inflate both revenue and operating expenses; they must be modelled to offset each other at the gross margin level. * Underestimating equity needs: A $21.6 billion capex plan cannot be funded by debt alone without breaching credit ratings. The model must force equity issuance to maintain a ~50-55% debt-to-capital ratio. * Miscalculating AFUDC: Construction Work in Progress (CWIP) generates non-cash earnings (Allowance for Funds Used During Construction) until the asset is placed in service. * Including non-recurring items in the base: The 2025 results include $48.7 million in impairment losses from non-regulated clean energy investments. These must be excluded from go-forward adjusted EPS calculations. * Misaligning dividend growth: Management targets a specific payout ratio. If EPS drops, the model should not automatically cut the dividend unless the payout ratio breaches extreme levels (e.g., >85%). * Double-counting fuel costs: Fuel costs are recovered via riders. If fuel prices spike, revenue must spike by the exact same amount in the model. ## Validation Checks * "EPS Growth should align with management's 6-8% target from 2026-2030; flag if outside this band." * "Rate Base CAGR should approximate 11.5% based on the $21.6 billion capex plan." * "Dividend Payout Ratio should remain between 60% and 75% of Adjusted EPS." * "Debt-to-Capitalisation ratio must remain below 60% to maintain investment-grade credit ratings." * "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every period." * "Utility Gross Margin should remain stable between 60% and 65%." * "Operating Cash Flow to Net Income conversion should remain above 1.5x due to heavy depreciation." * "Effective tax rate should remain between 10% and 15% due to renewable energy tax credits." ## Key Assumptions (Default Values) | Assumption | Default Value | Unit | Rationale | |---|---|---|---| | Residential Revenue Growth | 1.5 | % | Modest customer growth offset by energy efficiency | | Commercial Revenue Growth | 3.0 | % | Supported by local economic development and data centres | | Industrial Revenue Growth | 2.0 | % | Supported by new large customer projects (e.g., battery plants) | | Fuel & Purchased Power as % of Rev | 25.0 | % | Historical average, assuming normalised commodity prices | | SPP Network Costs as % of Rev | 8.5 | % | Based on 2025 actuals ($116M on $1,340M Q4 revenue run-rate) | | O&M Expense Growth | 2.0 | % | Inflationary pressures offset by cost mitigation actions | | Depreciation Rate (% of Gross PP&E) | 2.8 | % | Blended depreciation rate of utility infrastructure | | Annual Capital Expenditures | 4,320 | $ Millions | Straight-line allocation of the $21.6B 2026-2030 plan | | Effective Tax Rate | 12.0 | % | Historical average reflecting production tax credits | | Cost of New Debt | 5.5 | % | Current yield environment for BBB/Baa2 utility bonds | | Target Debt-to-Capitalisation | 52.0 | % | Required to maintain current credit ratings | | Annual Dividend per Share (2026) | 2.78 | $ | Based on declared quarterly dividend of $0.6950 | | Dividend Growth Rate | 5.0 | % | Aligned with lower end of long-term EPS growth target | | Allowed Return on Equity (ROE) | 9.7 | % | Based on the recent Kansas Central rate case settlement | | WACC | 6.5 | % | Standard discount rate for regulated electric utilities | | Terminal Growth Rate | 2.0 | % | Long-term inflation and population growth proxy | ## Data Sources & Benchmarks * **Filings**: SEC EDGAR (Evergy, Inc. 10-K, 10-Q, 8-K), Evergy Investor Relations website (investors.evergy.com). * **Key peers for benchmarking**: Ameren Corporation (AEE), Alliant Energy (LNT), WEC Energy Group (WEC), Xcel Energy (XEL), and Pinnacle West Capital (PNW). * **Industry data sources**: Edison Electric Institute (EEI) for utility capex trends, Southwest Power Pool (SPP) for wholesale pricing and transmission data, and the Kansas Corporation Commission (KCC) / Missouri Public Service Commission (MPSC) for rate case dockets. * **Consensus estimates source**: FactSet or Bloomberg for EPS and rate base growth consensus. ## Sources * Evergy, Inc. Q4 2025 Earnings Release and Financial Tables (February 19, 2026) - investors.evergy.com * Evergy, Inc. Q3 2025 Earnings Release (November 5, 2025) * Evergy, Inc. Q4 2025 Earnings Call Transcript (February 19, 2026) * Evergy, Inc. 2024 Annual Report on Form 10-K * Evergy, Inc. 2025 Proxy Statement and Prospectus Supplements --- ## Frequently asked questions ### What kind of company is Evergy and what services does it provide? Evergy, Inc. is a regulated electric utility company that generates, transmits, and distributes electricity. It serves approximately 1.7 million customers across Kansas and Missouri, operating primarily as a single reportable segment focused on regulated electric utility services. ### How does Evergy generate its revenue, and what factors influence its growth? Evergy generates revenue from distinct customer classes, including residential, commercial, industrial, and wholesale customers. Revenue growth is influenced by factors like population growth, local economic expansion, and weather-normalised usage per customer, with rates set by state commissions. ### What is Evergy's capital expenditure strategy, and how does it impact the company? Evergy has an extremely high capital expenditure program, with capex representing 45-50% of revenue, driven by a $21.6 billion investment plan for 2026-2030. This investment is split between approximately 40% maintenance and 60% growth, funding new generation plants and grid modernization. ### What is the primary purpose of the financial model for Evergy (EVRG)? The financial model evaluates Evergy's equity valuation and dividend sustainability. It projects the company's rate base growth, regulatory recovery lag, and massive capital expenditure programme to determine if it can achieve its targeted 6-8% annual EPS growth. ### Can I download an Excel financial model for Evergy (EVRG)? Yes, an Excel financial model for Evergy (EVRG) is available for download. This model provides a forecast horizon from FY2026 through FY2030, allowing users to analyze the company's financial performance and make their own assumptions. ### What is Evergy's business model and how are its returns determined? Evergy operates as an asset-heavy, rate-regulated monopoly in its franchised service territories. Its returns are primarily driven by the Allowed Return on Equity (ROE) on its rate base, which is determined by the Kansas Corporation Commission and the Missouri Public Service Commission. [Interactive forecast calculator](https://finamodel.com/companies/evergy/forecast)