Evergy, Inc.

Evergy, Inc. is a public utility holding company headquartered in Kansas City, Missouri, operating primarily through its wholly-owned direct subsidiaries: Evergy Kansas Central, Inc., Evergy Metro, Inc., and Evergy Missouri West, Inc. [Item 1, Business]. These subsidiaries are integrated, regulated electric utilities providing electricity to approximately 1.7 million customers across Kansas and Missouri [Item 1, Business]. The customer base comprises approximately 1.5 million residences, 0.2 million commercial firms, and 7,400 industrials, municipalities, and other electric utilities [Item 1, Business]. The company's financial performance is significantly impacted by seasonality, with roughly one-third of its retail revenues recorded in the third quarter [Item 1, Business]. Evergy's strategy centers on affordability, reliability, and sustainability, aiming for economic development in its service territories while delivering competitive long-term returns to shareholders [Item 1, Business].

The core business model of Evergy involves the generation, transmission, distribution, and sale of electricity within its franchised service territories in Kansas and Missouri [Item 1, Business]. Revenue is primarily derived from retail electricity sales, which accounted for 37% from residential, 33% from commercial, and 11% from industrial customers in 2025 [Item 1, Business]. Wholesale revenues contributed 5%, transmission revenues 9%, and other revenues 5% to the total in 2025 [Item 1, Business]. The company operates under a regulated utility model, where terms of service are regulated by state regulatory bodies, meaning it does not compete with other entities to supply and deliver electricity in its franchised areas [Item 1, Business]. However, Evergy does compete in the wholesale market to sell surplus power, primarily within the Southwest Power Pool, Inc. (SPP) Integrated Marketplace [Item 1, Business].

Evergy's power supply portfolio consists of approximately 15,800 megawatts (MWs) of owned generating capacity and renewable power purchase agreements [Item 1, Business]. In 2025, the fuel mix for net MWhs generated by owned resources and delivered under renewable power purchase agreements was 47% coal, 28% wind, landfill gas, and solar, 18% uranium, and 7% natural gas and oil [Item 1, Business]. Owned generation and power purchases from others constituted approximately 60% and 40%, respectively, of total MWhs generated and purchased over the last three years, with about 60% of purchased power under long-term renewable contracts [Item 1, Business]. The company also has firm capacity agreements totaling approximately 600 MWs with effective dates between 2025 and 2028, expiring between 2029 and 2033, to meet projected load capacity requirements [Item 1, Business].

For the fiscal year ended December 31, 2025, Evergy reported net income attributable to Evergy, Inc. of $855.6 million [Item 7, MD&A — Earnings Overview], a decrease of $17.9 million from $873.5 million in 2024 [Item 7, MD&A — Earnings Overview]. Diluted earnings per common share (EPS) for 2025 was $3.66 [Item 7, MD&A — Earnings Overview], down $0.13 from $3.79 in 2024 [Item 7, MD&A — Earnings Overview]. Total operating revenues for 2025 were $5,961.6 million [Item 7, MD&A — Evergy Results of Operations], an increase of $114.3 million from $5,847.3 million in 2024 [Item 7, MD&A — Evergy Results of Operations]. Fuel and purchased power costs decreased by $67.5 million to $1,412.4 million in 2025 from $1,479.9 million in 2024 [Item 7, MD&A — Evergy Results of Operations]. SPP network transmission costs increased by $67.1 million to $438.0 million in 2025 from $370.9 million in 2024 [Item 7, MD&A — Evergy Results of Operations]. Operating and maintenance expenses rose by $33.4 million to $995.3 million in 2025 from $961.9 million in 2024 [Item 7, MD&A — Evergy Results of Operations]. Depreciation and amortization increased by $48.9 million to $1,162.9 million in 2025 from $1,114.0 million in 2024 [Item 7, MD&A — Evergy Results of Operations]. Taxes other than income tax decreased by $32.5 million to $420.1 million in 2025 from $452.6 million in 2024 [Item 7, MD&A — Evergy Results of Operations]. Income from operations increased by $64.9 million to $1,532.9 million in 2025 from $1,468.0 million in 2024 [Item 7, MD&A — Evergy Results of Operations]. Other income (expense), net shifted from an income of $3.1 million in 2024 to an expense of $25.6 million in 2025, a change of $28.7 million [Item 7, MD&A — Evergy Results of Operations]. Interest expense increased by $53.2 million to $616.3 million in 2025 from $563.1 million in 2024 [Item 7, MD&A — Evergy Results of Operations]. Income tax expense remained relatively flat at $29.9 million in 2025 compared to $30.0 million in 2024 [Item 7, MD&A — Evergy Results of Operations]. Equity in earnings of equity method investees, net of income taxes, decreased by $1.0 million to $6.8 million in 2025 from $7.8 million in 2024 [Item 7, MD&A — Evergy Results of Operations]. Cash flows from operating activities were $2,045.2 million in 2025 [Item 7, MD&A — Liquidity and Capital Resources], while cash flows used in investing activities were $2,570.1 million [Item 7, MD&A — Liquidity and Capital Resources], and cash flows from financing activities were $522.0 million [Item 7, MD&A — Liquidity and Capital Resources]. As of December 31, 2025, cash and cash equivalents totaled $19.8 million [Item 7, MD&A — Liquidity and Capital Resources]. Total long-term debt, including current maturities, was $13,439.7 million [Item 7, MD&A — Significant Contractual Obligations and Other Commitments].

The decrease in net income attributable to Evergy, Inc. in 2025 was primarily due to higher operating and maintenance, depreciation, and interest expense, losses from non-regulated investments in early-stage clean energy and energy solution companies, and lower proceeds from corporate-owned life insurance (COLI) [Item 7, MD&A — Earnings Overview]. These negative impacts were partially offset by new Evergy Missouri West and Evergy Kansas Central retail rates effective in January and October 2025, respectively, and higher transmission revenues [Item 7, MD&A — Earnings Overview]. Diluted EPS also decreased due to these factors and a $0.05 per share decrease primarily from dilution related to Evergy's convertible notes [Item 7, MD&A — Earnings Overview]. Utility gross margin (non-GAAP) increased by $114.7 million in 2025, driven by a $133.7 million increase from new retail rates, a $38.0 million increase in transmission revenue, and a $10.6 million increase from higher retail sales due to favorable weather and weather-normalized commercial demand [Item 7, MD&A — Gross Margin (GAAP) and Utility Gross Margin (non-GAAP)]. These gains were partially offset by a $40.4 million decrease from the Kansas property tax rider and a $27.2 million decrease from items not included in fuel recovery mechanisms [Item 7, MD&A — Gross Margin (GAAP) and Utility Gross Margin (non-GAAP)].

Significant operational developments during the period include the signing of electric service agreements (ESAs) in February 2026 with multiple large load customers, primarily data centers, with a projected peak steady state load of approximately 1,900 MWs [Item 7, MD&A — Large Load Power Service Rate Plans and Executed Large Customer Agreements]. These ESAs, which include a 5-year transitional load period, are expected to commence service between 2026 and 2028 [Item 7, MD&A — Large Load Power Service Rate Plans and Executed Large Customer Agreements]. Evergy also announced plans in October 2024 to construct two combined-cycle natural gas plants in Kansas, each with an initial generating capacity of approximately 705 MWs, expected to begin operations by spring 2029 and spring 2030, respectively [Item 7, MD&A — Natural Gas Plant Investments]. Additionally, Evergy Missouri West plans a 440 MW simple-cycle natural gas plant in Missouri, expected to begin operations in 2030 [Item 7, MD&A — Natural Gas Plant Investments]. In 2025, Evergy Missouri West acquired assets for two solar generation facilities, Sunflower Sky (65 MWs in Kansas) and Foxtrot (100 MWs in Missouri), both expected to begin operations by summer 2027 [Item 7, MD&A — Renewable Plant Investments]. Evergy, Inc. repurchased $244.1 million aggregate principal amount of its 4.50% Convertible Notes in January and February 2026 for a total cost of $308.6 million [Item 7, MD&A — Convertible Note Repurchases].

Evergy's management expects to continue operating its integrated utilities within existing regulatory frameworks, focusing on economic development and meeting future electricity demand growth [Item 7, MD&A — Strategy]. The company targets growth in earnings per share and a 50%-60% dividend payout ratio [Item 7, MD&A — Strategy]. Evergy Metro filed an application with the MPSC in February 2026 requesting an increase to its retail revenues of approximately $140 million, with new rates expected to be effective in January 2027 [Item 7, MD&A — Evergy Metro's 2026 Rate Case Proceeding]. This request reflects a return on equity of 10.5% with a capital structure composed of 52% equity [Item 7, MD&A — Evergy Metro's 2026 Rate Case Proceeding]. Evergy Kansas Central's 2025 rate case, which requested an increase of approximately $196 million, was settled in July 2025 for a $128.0 million increase to retail revenues, with new rates effective in October 2025 [Item 7, MD&A — Evergy Kansas Central's 2025 Rate Case Proceeding].

A major growth area for Evergy is the increasing demand for electricity from data centers and other large load customers [Item 1A, Risk Factors]. In February 2026, Evergy Companies signed electric service agreements (ESAs) with multiple large load customers, primarily data centers, projecting a peak steady state load of approximately 1,900 MWs [Item 7, MD&A — Large Load Power Service Rate Plans and Executed Large Customer Agreements]. These ESAs, which include a 5-year transitional load period, are expected to commence service between 2026 and 2028 [Item 7, MD&A — Large Load Power Service Rate Plans and Executed Customer Agreements]. The Large Load Power Service (LLPS) rate plans, approved by the KCC and MPSC in November 2025, are designed to ensure new large customers pay their cost of service and include safeguards for existing customers [Item 7, MD&A — Large Load Power Service Rate Plans and Executed Customer Agreements]. These plans apply to new or existing customers adding load in excess of 75 MWs, with terms of 12 years after a transitional load period of up to 5 years [Item 7, MD&A — Large Load Power Service Rate Plans and Executed Customer Agreements].

Another significant growth vector is the modernization and expansion of Evergy's generation fleet. The company plans to construct two combined-cycle natural gas plants in Kansas, each with an initial generating capacity of approximately 705 MWs, expected to begin operations by spring 2029 and spring 2030, respectively [Item 7, MD&A — Natural Gas Plant Investments]. Evergy Missouri West also plans a 440 MW simple-cycle natural gas plant in Missouri, expected to begin operations in 2030 [Item 7, MD&A — Natural Gas Plant Investments]. These natural gas investments are supported by recent Missouri legislation (SB 4) allowing for the inclusion of certain construction work in progress (CWIP) in rate base and extending plant-in-service accounting (PISA) provisions through 2035 [Item 7, MD&A — Missouri Legislation]. Additionally, Evergy Kansas Central intends to construct a 159 MW solar generation facility, Kansas Sky, though its operational timeline is uncertain due to ongoing litigation [Item 7, MD&A — Renewable Plant Investments]. Evergy Missouri West acquired assets for two solar facilities, Sunflower Sky (65 MWs in Kansas) and Foxtrot (100 MWs in Missouri), both expected to begin operations by summer 2027 [Item 7, MD&A — Renewable Plant Investments].

Evergy's operational outlook includes a focus on maintaining excellence in day-to-day operations, emphasizing safety, cost efficiency, infrastructure investment, new technology deployment, and process improvement [Item 7, MD&A — Strategy]. These efforts are expected to enhance reliability, customer satisfaction, and cost performance [Item 7, MD&A — Strategy]. The company's generation modernization is expected to result in ongoing reductions in CO2 emissions, with 2025 levels nearly 50% lower than 2005 levels [Item 1, Business]. Evergy has a long-term goal to achieve net-zero carbon dioxide equivalent (CO2e) emissions for scope 1 and scope 2 emissions by 2050 [Item 1, Business]. This trajectory is dependent on factors such as technology developments, electricity demand trends, grid reliability, transmission capacity, and supportive energy policies [Item 1, Business].

The company's capital allocation plans include targeting approximately $21.6 billion of expected capital investments through 2030 [Item 7, MD&A — Strategy]. This includes $9,344 million for new generation, $2,186 million for other generating facilities, $3,883 million for transmission facilities, $4,896 million for distribution facilities, and $1,287 million for general facilities [Item 7, MD&A — Capital Expenditures]. Evergy expects to issue approximately $12.3 billion of securities through debt capital markets between 2026 and 2030, including refinancing $3.9 billion of long-term debt maturities and open-market repurchases [Item 7, MD&A — Debt Issuances]. Additionally, Evergy expects to issue $3.3 billion of equity between 2026 and 2030 [Item 7, MD&A — Equity Issuances]. The company targets a long-term dividend payout ratio of 50%-60% [Item 7, MD&A — Common Stock Dividends].

Management has flagged several structural headwinds and execution risks to its growth plan. Uncertainties related to projected rapid growth in electricity demand driven by data centers and other large load customers could create capital access, revenue recovery, and customer affordability risks if these demands do not materialize as projected or are not sustained [Item 1A, Risk Factors]. The ability to build or acquire new generation, battery storage, and transmission facilities to meet future demand is subject to challenges such as changes in labor costs, availability and productivity, contractor performance, and increased financing costs [Item 1A, Risk Factors]. Decisions of regulators regarding customer rates and the prudency of capital expenditures and asset retirements also pose a risk, as they may not allow full cost recovery or a reasonable return on investment [Item 1A, Risk Factors]. The company also faces risks from supply chain disruptions, tariffs, and inflation, which could increase costs and delay projects [Item 1A, Risk Factors]. Geopolitical conflicts could further exacerbate supply chain uncertainty [Item 1A, Risk Factors].

Evergy faces material risks including regulatory uncertainty where prices set by FERC, KCC, and MPSC may not be sufficient to recover prudently incurred costs or provide a reasonable return on investment, potentially leading to under-recovery or write-offs of regulatory assets [Item 1A, Risk Factors]. Legislative and regulatory changes, such as new environmental laws or operational standards, could increase compliance costs or result in penalties, with the EPA's interpretations of coal combustion residual (CCR) rules potentially requiring modified compliance plans or more stringent remediation [Item 1A, Risk Factors]. Financial risks are significant, particularly if projected electricity demand from data centers and large load customers does not materialize or is not sustained, which could materially adversely affect financial results [Item 1A, Risk Factors]. Financial market volatility, increases in interest rates, or credit rating downgrades could increase financing costs, limit access to capital, and dilute equity, with Evergy Kansas Central and Evergy Metro having outstanding tax-exempt bonds with interest rates determined weekly, exposing them to liquidity risk if bonds are tendered and cannot be remarketed [Item 1A, Risk Factors]. Supply chain disruptions, tariffs, and inflation could increase costs for labor, materials, and services, potentially leading to unrecovered costs due to "regulatory lag" [Item 1A, Risk Factors]. Operational risks include the inherent risks of owning and operating Wolf Creek nuclear generating unit, where damages or decommissioning costs could exceed recovery mechanisms or insurance coverage, and an extended outage could lead to significant financial impact, including potential exclusion of the Wolf Creek investment from rate base by state regulatory commissions [Item 1A, Risk Factors]. The company is also exposed to wildfire risk, exacerbated by severe weather and climate change, with potential liabilities exceeding insurance coverage and a $5.0 million limit on punitive damages in Kansas [Item 1A, Risk Factors]. Cybersecurity breaches, criminal activity, and terrorist attacks on technology networks and systems, including those of third-party vendors, could disrupt operations, lead to data loss, legal liability, and reputational harm, with increasing sophistication of attacks, including through AI, posing an ongoing threat [Item 1A, Risk Factors]. The cost and schedule of capital projects, including new natural gas and renewable generating facilities, are subject to risks such as cost overruns, regulatory disallowances, delays in permits, and supplier failures, with a single vendor for power island equipment at new natural gas plants creating potential for project delays [Item 1A, Risk Factors]. Failure to attract and retain a qualified workforce or to maintain satisfactory collective bargaining agreements could negatively impact business and operations [Item 1A, Risk Factors].

Management's overall tone emphasizes a commitment to operating integrated utilities within existing regulatory frameworks, with a strong focus on enabling economic development across its service territories to strengthen communities and meet existing and future customer electricity demand growth [Item 7, MD&A — Strategy]. The company aims to achieve this through the continued evolution of its generation, transmission, and distribution systems, while consistently delivering on affordability, reliability, and sustainability objectives [Item 7, MD&A — Strategy]. Management targets competitive long-term returns to shareholders, including growth in earnings per share and a 50%-60% dividend payout ratio [Item 7, MD&A — Strategy]. Three strategic priorities are highlighted for the period ahead: first, maintaining excellence in day-to-day operations, with a focus on safety-first, cost efficiency, infrastructure investment, new technology deployment, and process improvement to enhance reliability, customer satisfaction, and cost performance [Item 7, MD&A — Strategy]; second, fostering economic development in Kansas and Missouri by supporting the attraction of new businesses and large load customers, while ensuring protections for existing customers through key safeguards in the Large Load Power Service (LLPS) rate plans [Item 7, MD&A — Strategy]; and third, targeting approximately $21.6 billion of expected capital investments through 2030, including $9.3 billion for new generation, primarily natural gas, renewable generation, and battery storage capacity, to support economic development opportunities and modernize Evergy's generation fleet [Item 7, MD&A — Strategy].