Evergy has announced a five-year strategic plan designed to increase profitability for shareholders and, it says, benefits for customers and communities it serves.
Evergy’s “Sustainability Transformation Plan” was unanimously approved by the utility’s Board of Directors. The overall goal, according to President and CEO Terry Bassham, has several components, including enhancing earnings growth and so-called value creation for shareholders, modernizing the current grid, reducing carbon emissions and creating greener, more reliable energy with an ongoing “cost-conscious” approach.
The plan follows an independent review that started in February after Evergy started a cooperation agreement with Elliott Management Corporation, now the utility’s largest investor, and after Elliott questioned Evergy’s strategic direction. Elliott Senior Portfolio Manager Jeff Rosenbaum says the plan will “optimize capital allocation” and increase Evergy’s operational efficiencies as the company moves forward.
Anticipated benefits of the Evergy Sustainability Transformation Plan
*Increased system investment and rate base growth. Under the company’s new plan, Evergy expects $8.9 billion of base capital investments through 2024, or approximately $1.4 billion more than its prior plan. These capital investments are expected to support 5% to 6% compounded annual rate base growth from 2019 to 2024. Evergy has identified and is currently evaluating additional projects that have the potential to create incremental capital investment opportunities.
*Enhanced earnings growth. The Company is targeting EPS compounded annual growth of 6% to 8% through 2024, consistent with top-performing utilities, compared to its previous target of 5% to 7% through 2023.
*Continued cost discipline. Since closing its merger, Evergy has achieved in excess of $250 million of merger savings, well ahead of its original target. Strong execution to-date builds a solid foundation for Evergy to achieve its plan of 25% reduction in operations and management costs by 2024 from 2018 levels.
*Value creating total returns. Evergy expects dividend growth in line with EPS growth targeting a payout ratio of 60% to 70%. Evergy plans to generate total annual shareholder returns of 9% to 11% through 2024.
