Evergy 10-Q 2023-03-31

Filed 2023-05-05. 8 sections, 361K characters. Original on sec.gov · Markdown · JSON

Cover and table of contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from to


	Exact name of registrant as specified in its charter,
Commission	state of incorporation, address of principal	I.R.S. Employer
File Number	executive offices and telephone number	Identification Number

001-38515	EVERGY, INC.	82-2733395

(a Missouri corporation)

1200 Main Street

Kansas City, Missouri 64105

(816) 556-2200












001-03523	EVERGY KANSAS CENTRAL, INC.	48-0290150

(a Kansas corporation)

818 South Kansas Avenue

Topeka, Kansas 66612

(785) 575-6300


















000-51873	EVERGY METRO, INC.	44-0308720

(a Missouri corporation)

1200 Main Street

Kansas City, Missouri 64105

(816) 556-2200


	Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Evergy, Inc. common stock	EVRG	The Nasdaq Stock Market LLC


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Evergy, Inc.			Yes	x		No	☐

Evergy Kansas Central, Inc.			Yes	x		No	☐

Evergy Metro, Inc.			Yes	x		No	☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Evergy, Inc.			Yes	x		No	☐

Evergy Kansas Central, Inc.			Yes	x		No	☐

Evergy Metro, Inc.			Yes	x		No	☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Evergy, Inc.	Large Accelerated Filer			x	Accelerated Filer		☐	Non-accelerated Filer	☐	Smaller Reporting Company	☐	Emerging Growth Company	☐

Evergy Kansas Central, Inc.	Large Accelerated Filer			☐	Accelerated Filer		☐	Non-accelerated Filer	x	Smaller Reporting Company	☐	Emerging Growth Company	☐

Evergy Metro, Inc.	Large Accelerated Filer			☐	Accelerated Filer		☐	Non-accelerated Filer	x	Smaller Reporting Company	☐	Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act.

Evergy, Inc.		☐

Evergy Kansas Central, Inc.		☐

Evergy Metro, Inc.		☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Evergy, Inc.			Yes	☐		No	x

Evergy Kansas Central, Inc.			Yes	☐		No	x

Evergy Metro, Inc.			Yes	☐		No	x

On April 28, 2023, Evergy, Inc. had 229,680,947 shares of common stock outstanding. On April 28, 2023, Evergy Metro, Inc. and Evergy Kansas Central, Inc. each had one share of common stock outstanding and held by Evergy, Inc.


Evergy Kansas Central, Inc. and Evergy Metro, Inc. meet the conditions set forth in General Instruction (H)(1)(a) and (b) of Form 10-Q and are therefore filing this Form 10-Q with the reduced disclosure format.

This combined Quarterly Report on Form 10-Q is provided by the following registrants: Evergy, Inc. (Evergy), Evergy Kansas Central, Inc. (Evergy Kansas Central) and Evergy Metro, Inc. (Evergy Metro) (collectively, the Evergy Companies). Information relating to any individual registrant is filed by such registrant solely on its own behalf. Each registrant makes no representation as to information relating exclusively to the other registrants.

This report should be read in its entirety. No one section of the report deals with all aspects of the subject matter. It should be read in conjunction with the consolidated financial statements and related notes and with the management's discussion and analysis of financial condition and results of operations included in the annual report on Form 10-K for the fiscal year ended December 31, 2022 for each of Evergy, Evergy Kansas Central and Evergy Metro (2022 Form 10-K).


TABLE OF CONTENTS
			Page Number
Cautionary Statements Regarding Certain Forward-Looking Information			4
Glossary of Terms			6

Part I - Financial Information

Item 1.	Financial Statements
	Evergy, Inc.
	Unaudited Consolidated Balance Sheets		8
	Unaudited Consolidated Statements of Comprehensive Income		10
	Unaudited Consolidated Statements of Cash Flows		11
	Unaudited Consolidated Statements of Changes in Equity		12
	Evergy Kansas Central, Inc.
	Unaudited Consolidated Balance Sheets		13
	Unaudited Consolidated Statements of Income		15
	Unaudited Consolidated Statements of Cash Flows		16
	Unaudited Consolidated Statements of Changes in Equity		17
	Evergy Metro, Inc.
	Unaudited Consolidated Balance Sheets		18
	Unaudited Consolidated Statements of Comprehensive Income		20
	Unaudited Consolidated Statements of Cash Flows		21
	Unaudited Consolidated Statements of Changes in Equity		22

	Combined Notes to Unaudited Consolidated Financial Statements for Evergy, Inc., Evergy Kansas Central, Inc. and Evergy Metro, Inc.		23
	Note 1:	Organization and Basis of Presentation	23
	Note 2:	Revenue	28
	Note 3:	Receivables	29
	Note 4:	Rate Matters and Regulation	31


	Note 5:	Pension Plans and Post-Retirement Benefits	33
	Note 6:	Short-Term Borrowings and Short-Term Bank Lines of Credit	34
	Note 7:	Long-Term Debt	36
	Note 8:	Derivative Instruments	36
	Note 9:	Fair Value Measurements	40
	Note 10:	Commitments and Contingencies	45
	Note 11:	Related Party Transactions and Relationships	49

	Note 12:	Taxes	50
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		52
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		66
Item 4.	Controls and Procedures		66

Part II - Other Information

Item 1.	Legal Proceedings		67
Item 1A.	Risk Factors		67
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		68
Item 3.	Defaults Upon Senior Securities		68
Item 4.	Mine Safety Disclosures		68
Item 5.	Other Information		69
Item 6.	Exhibits		71

Signatures			73

CAUTIONARY STATEMENTS REGARDING CERTAIN FORWARD-LOOKING INFORMATION

Statements made in this document that are not based on historical facts are forward-looking, may involve risks and uncertainties, and are intended to be as of the date when made. Forward-looking statements include, but are not limited to, statements relating to Evergy's strategic plan, including, without limitation, those related to earnings per share, dividend, operating and maintenance expense and capital investment goals; the outcome of legislative efforts and regulatory and legal proceedings; future energy demand; future power prices; plans with respect to existing and potential future generation resources; the availability and cost of generation resources and energy storage; target emissions reductions; and other matters relating to expected financial performance or affecting future operations. Forward-looking statements are often accompanied by forward-looking words such as "anticipates," "believes," "expects," "estimates," "forecasts," "should," "could," "may," "seeks," "intends," "proposed," "projects," "planned," "target," "outlook," "remain confident," "goal," "will" or other words of similar meaning. Forward-looking statements involve risks, uncertainties and other factors that could cause actual results to differ materially from the forward-looking information.

In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the Evergy Companies are providing a number of risks, uncertainties and other factors that could cause actual results to differ from the forward-looking information. These risks, uncertainties and other factors include, but are not limited to: economic and weather conditions and any impact on sales, prices and costs; changes in business strategy or operations; the impact of federal, state and local political, legislative, judicial and regulatory actions or developments, including deregulation, re-regulation, securitization and restructuring of the electric utility industry; decisions of regulators regarding, among other things, customer rates and the prudency of operational decisions such as capital expenditures and asset retirements; changes in applicable laws, regulations, rules, principles or practices, or the interpretations thereof, governing tax, accounting and environmental matters, including air and water quality and waste management and disposal; the impact of climate change, including increased frequency and severity of significant weather events and the extent to which counterparties are willing to do business with, finance the operations of or purchase energy from the Evergy Companies due to the fact that the Evergy Companies operate coal-fired generation; prices and availability of electricity and natural gas in wholesale markets; market perception of the energy industry and the Evergy Companies; the impact of future Coronavirus (COVID-19) variants on, among other things, sales, results of operations, financial condition, liquidity and cash flows, and also on operational issues, such as supply chain issues and the availability and ability of the Evergy Companies' employees and suppliers to perform the functions that are necessary to operate the Evergy Companies; changes in the energy trading markets in which the Evergy Companies participate, including retroactive repricing of transactions by regional transmission organizations (RTO) and independent system operators; financial market conditions and performance, current disruptions in the banking industry, including changes in interest rates and credit spreads and in availability and cost of capital and the effects on derivatives and hedges, nuclear decommissioning trust and pension plan assets and costs; impairments of long-lived assets or goodwill; credit ratings; inflation rates; the transition to a replacement for the London Interbank Offered Rate (LIBOR) benchmark interest rate; effectiveness of risk management policies and procedures and the ability of counterparties to satisfy their contractual commitments; impact of physical and cybersecurity breaches, criminal activity, terrorist attacks, acts of war and other disruptions to the Evergy Companies' facilities or information technology infrastructure or the facilities and infrastructure of third-party service providers on which the Evergy Companies rely; impact of the Russian, Ukrainian conflict on the global energy market, ability to carry out marketing and sales plans; cost, availability, quality and timely provision of equipment, supplies, labor and fuel; ability to achieve generation goals and the occurrence and duration of planned and unplanned generation outages; delays and cost increases of generation, transmission, distribution or other projects; the Evergy Companies' ability to manage their transmission and distribution development plans and transmission joint ventures; the inherent risks associated with the ownership and operation of a nuclear facility, including environmental, health, safety, regulatory and financial risks; workforce risks, including those related to the Evergy Companies' ability to attract and retain qualified personnel, maintain satisfactory relationships with their labor unions and manage costs of, or changes in, wages, retirement, health care and other benefits; disruption, costs and uncertainties caused by or related to the actions of individuals or entities, such as activist shareholders or special interest groups, that seek to influence Evergy's strategic plan, financial results or operations; the impact of changing expectations and demands of the Evergy Companies' customers, regulators, investors and stakeholders, including heightened emphasis on environmental, social and governance concerns; the possibility that strategic initiatives, including mergers, acquisitions and divestitures, and long-term financial plans, may not create the value that they are expected to achieve in a timely manner or at all; difficulties in maintaining relationships with customers, employees, regulators or suppliers; and other risks and uncertainties.

This list of factors is not all-inclusive because it is not possible to predict all factors. You should also carefully consider the information contained in the Evergy Companies' other filings with the Securities and Exchange Commission (SEC). Additional risks and uncertainties are discussed from time to time in current, quarterly and annual reports filed by the Evergy Companies with the SEC. Each forward-looking statement speaks only as of the date of the particular statement. The Evergy Companies undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

AVAILABLE INFORMATION

The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at sec.gov. Additionally, information about the Evergy Companies, including their combined annual reports on Form 10-K, combined quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed with the SEC, is also available through the Evergy Companies' website, http://investors.evergy.com. Such reports are accessible at no charge and are made available as soon as reasonably practical after such material is filed with or furnished to the SEC.

Investors should note that the Evergy Companies announce material financial information in SEC filings, press releases and public conference calls. In accordance with SEC guidelines, the Evergy Companies also use the Investor Relations section of their website, http://investors.evergy.com, to communicate with investors. It is possible that the financial and other information posted there could be deemed to be material information. The information on the Evergy Companies' website is not part of this document.

GLOSSARY OF TERMS

The following is a glossary of frequently used abbreviations or acronyms that are found throughout this report.


Abbreviation or Acronym						Definition

ACE						Affordable Clean Energy
AEP						American Electric Power Company, Inc.
AFUDC						Allowance for funds used during construction
AOCI						Accumulated other comprehensive income
AROs						Asset retirement obligations


BSER						Best system of emission reduction
CAA						Clean Air Act
CCN						Certificate of Convenience and Necessity
CCRs						Coal combustion residuals
CO2						Carbon dioxide
COLI						Corporate-owned life insurance
CPP						Clean Power Plan
CSAPR						Cross-State Air Pollution


ELG						Effluent limitations guidelines
EPA						Environmental Protection Agency
EPS						Earnings per common share

ERISA						Employee Retirement Income Security Act of 1974, as amended
ERSP						Earnings Review and Sharing Plan
Evergy						Evergy, Inc. and its consolidated subsidiaries
Evergy Board						Evergy Board of Directors
Evergy Companies						Evergy, Evergy Kansas Central, and Evergy Metro, collectively, which are individual registrants within the Evergy consolidated group
Evergy Kansas Central						Evergy Kansas Central, Inc., a wholly-owned subsidiary of Evergy, and its consolidated subsidiaries
Evergy Kansas South						Evergy Kansas South, Inc., a wholly-owned subsidiary of Evergy Kansas Central
Evergy Metro						Evergy Metro, Inc., a wholly-owned subsidiary of Evergy, and its consolidated subsidiaries

Evergy Missouri West						Evergy Missouri West, Inc., a wholly-owned subsidiary of Evergy
Evergy Transmission Company						Evergy Transmission Company, LLC
Exchange Act						The Securities Exchange Act of 1934, as amended

February 2021 winter weather event						Significant winter weather event in February 2021 that resulted in extremely cold temperatures over a multi-day period across much of the central and southern United States
FERC						Federal Energy Regulatory Commission
FMBs						First Mortgage Bonds
GAAP						Generally Accepted Accounting Principles
GHG						Greenhouse gas
Great Plains Energy						Great Plains Energy Incorporated
JEC						Jeffrey Energy Center
KCC						State Corporation Commission of the State of Kansas
KDHE						Kansas Department of Health & Environment

kV						Kilovolt


Abbreviation or Acronym						Definition
MDNR						Missouri Department of Natural Resources

MPSC						Public Service Commission of the State of Missouri
MW						Megawatt
MWh						Megawatt hour
NAAQS						National Ambient Air Quality Standards
NAV						Net asset value

OCI						Other comprehensive income
OPC						Office of the Public Counsel

Prairie Wind						Prairie Wind Transmission, LLC, 50% owned by Evergy Kansas Central
RSU						Restricted share unit
RTO						Regional transmission organization
SEC						Securities and Exchange Commission
SIP						State implementation plan
SPP						Southwest Power Pool, Inc.


TCR						Transmission congestion right
TDC						Transmission delivery charge
Term Loan Facility						Term Loan Credit Agreement
TFR						Transmission formula rate
Transource						Transource Energy, LLC and its subsidiaries, 13.5% owned by Evergy Transmission Company

VIE						Variable interest entity
Wolf Creek						Wolf Creek Generating Station

PART I - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS


EVERGY, INC.
Consolidated Balance Sheets
(Unaudited)

	March 31			December 31
	2023			2022
ASSETS	(millions, except share amounts)
CURRENT ASSETS:
Cash and cash equivalents		$	28.4		$	25.2

Receivables, net of allowance for credit losses of $22.9 and $31.4, respectively		207.3			315.3
Accounts receivable pledged as collateral		365.0			359.0
Fuel inventory and supplies		724.1			672.9
Income taxes receivable		—			9.3
Regulatory assets		385.5			368.0
Prepaid expenses		41.0			47.8
Other assets		47.0			44.5
Total Current Assets		1,798.3			1,842.0
PROPERTY, PLANT AND EQUIPMENT, NET		22,329.0			22,136.5
PROPERTY, PLANT AND EQUIPMENT OF VARIABLE INTEREST ENTITIES, NET		138.9			140.7
OTHER ASSETS:
Regulatory assets		1,840.0			1,846.3
Nuclear decommissioning trust fund		689.5			653.3
Goodwill		2,336.6			2,336.6
Other		553.6			534.5
Total Other Assets		5,419.7			5,370.7
TOTAL ASSETS		$	29,685.9		$	29,489.9

The accompanying Notes to Unaudited Consolidated Financial Statements are an integral part of these statements.


EVERGY, INC.
Consolidated Balance Sheets
(Unaudited)

	March 31			December 31
	2023			2022
LIABILITIES AND EQUITY	(millions, except share amounts)
CURRENT LIABILITIES:
Current maturities of long-term debt		$	139.4		$	439.1

Notes payable and commercial paper		1,748.8			1,332.3
Collateralized note payable		365.0			359.0
Accounts payable		366.4			600.8

Accrued taxes		261.5			163.0
Accrued interest		122.1			124.3
Regulatory liabilities		193.9			155.4
Asset retirement obligations		39.7			40.4
Accrued compensation and benefits		52.7			81.1
Other		176.9			198.4
Total Current Liabilities		3,466.4			3,493.8
LONG-TERM LIABILITIES:
Long-term debt, net		10,097.2			9,905.7
Deferred income taxes		2,027.6			1,996.6
Unamortized investment tax credits		172.8			174.6
Regulatory liabilities		2,523.7			2,566.8
Pension and post-retirement liability		481.1			458.4
Asset retirement obligations		1,124.1			1,112.8
Other		291.3			287.9
Total Long-Term Liabilities		16,717.8			16,502.8
Commitments and Contingencies (Note 10)
EQUITY:
Evergy, Inc. Shareholders' Equity:
Common stock - 600,000,000 shares authorized, without par value 229,676,699 and 229,546,105 shares issued, stated value		7,222.2			7,219.7
Retained earnings		2,300.0			2,298.5
Accumulated other comprehensive loss		(33.2)			(34.5)
Total Evergy, Inc. Shareholders' Equity		9,489.0			9,483.7
Noncontrolling Interests		12.7			9.6
Total Equity		9,501.7			9,493.3
TOTAL LIABILITIES AND EQUITY		$	29,685.9		$	29,489.9

The accompanying Notes to Unaudited Consolidated Financial Statements are an integral part of these statements.

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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following combined Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the consolidated financial statements and accompanying notes in this combined Quarterly Report on Form 10-Q and the Evergy Companies' combined 2022 Form 10-K. None of the registrants make any representation as to information related solely to Evergy, Evergy Kansas Central or Evergy Metro other than itself.

EVERGY, INC.

EXECUTIVE SUMMARY

Evergy is a public utility holding company incorporated in 2017 and headquartered in Kansas City, Missouri. Evergy operates primarily through the following wholly-owned direct subsidiaries listed below.

Evergy Kansas Central is an integrated, regulated electric utility that provides electricity to customers in the state of Kansas. Evergy Kansas Central has one active wholly-owned subsidiary with significant operations, Evergy Kansas South.
Evergy Metro is an integrated, regulated electric utility that provides electricity to customers in the states of Missouri and Kansas.
Evergy Missouri West is an integrated, regulated electric utility that provides electricity to customers in the state of Missouri.
Evergy Transmission Company owns 13.5% of Transource with the remaining 86.5% owned by AEP Transmission Holding Company, LLC, a subsidiary of AEP. Transource is focused on the development of competitive electric transmission projects. Evergy Transmission Company accounts for its investment in Transource under the equity method.

Evergy Kansas Central also owns a 50% interest in Prairie Wind, which is a joint venture between Evergy Kansas Central and subsidiaries of AEP and Berkshire Hathaway Energy Company. Prairie Wind owns a 108-mile, 345 kV double-circuit transmission line that provides transmission service in the SPP. Evergy Kansas Central accounts for its investment in Prairie Wind under the equity method.

Evergy Kansas Central, Evergy Kansas South, Evergy Metro and Evergy Missouri West conduct business in their respective service territories using the name Evergy. Collectively, the Evergy Companies have approximately 15,400 MWs of owned generating capacity and renewable power purchase agreements and engage in the generation, transmission, distribution and sale of electricity to approximately 1.7 million customers in the states of Kansas and Missouri. The Evergy Companies assess financial performance and allocate resources on a consolidated basis (i.e., operate in one segment).

Evergy Kansas Central and Evergy Metro 2023 Rate Case Proceeding

In April 2023, Evergy Kansas Central and Evergy Metro filed an application with the KCC to request an increase to their retail revenues. See Note 4 to the consolidated financial statements for additional information.

Renewable Generation Investment

In August 2022, Evergy Missouri West entered into an agreement with a renewable energy development company to purchase for approximately $250 million an operational wind farm located in the state of Oklahoma with a generating capacity of approximately 199 MW. Pursuant to the agreement, Evergy Missouri West is permitted to assign its right to purchase the wind farm to another entity, including to other Evergy affiliated companies.

Evergy Missouri West's purchase is subject to regulatory approvals and closing conditions, including the granting of a CCN by the MPSC. In April 2023, the MPSC issued a final order granting the CCN pursuant to certain conditions related to the sharing of operational costs between ratepayers and shareholders.

Evergy Missouri West is currently evaluating the assignment of its right to purchase the wind farm to Evergy Kansas Central, which has included the purchase of the wind farm in its rate case application to the KCC which was filed in April 2023. See Note 4 to the consolidated financial statements for additional information on Evergy Kansas Central's rate case proceeding. The purchase of the wind farm is expected to close in the second quarter of 2023.

Regulatory Proceedings

See Note 4 to the consolidated financial statements for information regarding regulatory proceedings.

Wolf Creek Refueling Outage

Wolf Creek's most recent refueling outage began in October 2022 and the unit returned to service in November 2022. Wolf Creek's next refueling outage is planned to begin in the first quarter of 2024.

Earnings Overview

The following table summarizes Evergy's net income and diluted EPS.



Three Months Ended March 31		2023		Change		2022
	(millions, except per share amounts)
Net income attributable to Evergy, Inc.		$	142.6	$	20.1	$	122.5
Earnings per common share, diluted		0.62		0.09		0.53

Net income attributable to Evergy, Inc. increased for the three months ended March 31, 2023, compared to the same period in 2022, primarily due to lower operating and maintenance expenses, new Evergy Metro and Evergy

Missouri West retail rates effective in January 2023 and a realized loss in 2022 from an equity investment; partially offset by higher depreciation expense, higher interest expense and lower retail sales in the first quarter of 2023 driven by warmer winter weather.

Diluted EPS increased for the three months ended March 31, 2023, compared to the same period in 2022, primarily due to the increase in net income attributable to Evergy, Inc. discussed above.

For additional information regarding the change in net income, refer to the Evergy Results of Operations section within this MD&A.

Non-GAAP Measures

Evergy Utility Gross Margin (non-GAAP)

Utility gross margin (non-GAAP) is a financial measure that is not calculated in accordance with GAAP. Utility gross margin (non-GAAP), as used by the Evergy Companies, is defined as operating revenues less fuel and purchased power costs and amounts billed by the SPP for network transmission costs. Expenses for fuel and purchased power costs, offset by wholesale sales margin, are subject to recovery through cost adjustment mechanisms. As a result, changes in fuel and purchased power costs are offset in operating revenues with minimal impact on net income. In addition, SPP network transmission costs fluctuate primarily due to investments by SPP members for upgrades to the transmission grid within the SPP RTO. As with fuel and purchased power costs, changes in SPP network transmission costs are mostly reflected in the prices charged to customers with minimal impact on net income. The Evergy Companies' definition of utility gross margin (non-GAAP) may differ from similar terms used by other companies.

Utility gross margin (non-GAAP) is intended to aid an investor's overall understanding of results. Management believes that utility gross margin (non-GAAP) provides a meaningful basis for evaluating the Evergy Companies' operations across periods because utility gross margin (non-GAAP) excludes the revenue effect of fluctuations in fuel and purchased power costs and SPP network transmission costs. Utility gross margin (non-GAAP) is used internally to measure performance against budget and in reports for management and the Evergy Board. Utility gross margin (non-GAAP) should be viewed as a supplement to, and not a substitute for, gross margin, which is the most directly comparable financial measure prepared in accordance with GAAP. Gross margin under GAAP is defined as the excess of sales over cost of goods sold.

Utility gross margin (non-GAAP) differs from the GAAP definition of gross margin due to the exclusion of operating and maintenance expenses determined to be directly attributable to revenue-producing activities, depreciation and amortization and taxes other than income tax. See the Evergy Companies' Results of Operations for a reconciliation of utility gross margin (non-GAAP) to gross margin, the most comparable GAAP measure.

Adjusted Earnings (non-GAAP) and Adjusted EPS (non-GAAP)

Management believes that adjusted earnings (non-GAAP) and adjusted EPS (non-GAAP) are representative measures of Evergy's recurring earnings, assists in the comparability of results and is consistent with how management reviews performance. Evergy's adjusted earnings (non-GAAP) and adjusted EPS (non-GAAP) for the three months ended March 31, 2022 have been recast, as applicable, to conform to the current year presentation.

Evergy's adjusted earnings (non-GAAP) and adjusted EPS (non-GAAP) for the three months ended March 31, 2023 were $136.1 million or $0.59 per share. For the three months ended March 31, 2022, Evergy's adjusted earnings (non-GAAP) and adjusted EPS (non-GAAP) were $129.9 million or $0.56 per share.

In addition to net income attributable to Evergy, Inc. and diluted EPS, Evergy's management uses adjusted earnings (non-GAAP) and adjusted EPS (non-GAAP) to evaluate earnings and EPS without i.) the costs resulting from non-regulated energy marketing margins from the February 2021 winter weather event; ii.) gains or losses related to equity investments subject to a restriction on sale; iii.) the revenues collected from customers for the return on investment of the retired Sibley Station in 2022 for future refunds to customers; iv.) the mark-to-market impacts of economic hedges related to Evergy Kansas Central's non-regulated 8% ownership share of JEC; and v.) the

transmission revenues collected from customers in 2022 through Evergy Kansas Central's FERC TFR to be refunded to customers in accordance with a December 2022 FERC order.

Adjusted earnings (non-GAAP) and adjusted EPS (non-GAAP) are intended to aid an investor's overall understanding of results. Management believes that adjusted earnings (non-GAAP) provides a meaningful basis for evaluating Evergy's operations across periods because it excludes certain items that management does not believe are indicative of Evergy's ongoing performance or that can create period to period earnings volatility.

Adjusted earnings (non-GAAP) and adjusted EPS (non-GAAP) are used internally to measure performance against budget and in reports for management and the Evergy Board. Adjusted earnings (non-GAAP) and adjusted EPS (non-GAAP) are financial measures that are not calculated in accordance with GAAP and may not be comparable to other companies' presentations or more useful than the GAAP information provided elsewhere in this report.


	Earnings (Loss)		Earnings (Loss) per Diluted Share		Earnings (Loss)		Earnings (Loss) per Diluted Share
Three Months Ended March 31	2023				2022
	(millions, except per share amounts)
Net income attributable to Evergy, Inc.	$	142.6	$	0.62	$	122.5	$	0.53
Non-GAAP reconciling items:

Sibley Station return on investment, pre-tax(a)	—		—		(3.1)		(0.01)
Mark-to-market impact of JEC economic hedges, pre-tax(b)	(8.4)		(0.04)		—		—
Non-regulated energy marketing costs related to February 2021 winter weather event, pre-tax(c)	0.1		—		0.3		—





Restricted equity investment losses, pre-tax(d)	—		—		14.2		0.06
TFR refund, pre-tax(e)	—		—		(1.9)		(0.01)
Income tax (benefit) expense (f)	1.8		0.01		(2.1)		(0.01)

Adjusted earnings (non-GAAP)	$	136.1	$	0.59	$	129.9	$	0.56

(a)Reflects revenues collected from customers for the return on investment of the retired Sibley Station in 2022 that are included in operating revenues on the consolidated statements of comprehensive income.

(b)Reflects mark-to-market gains or losses related to forward contracts for natural gas and electricity entered into as economic hedges against fuel price volatility related to Evergy Kansas Central's non-regulated 8% ownership share of JEC that are included in operating revenues on the consolidated statements of comprehensive income.

(c)Reflects non-regulated energy marketing incentive compensation costs related to the February 2021 winter weather event that are included in operating and maintenance expense on the consolidated statements of comprehensive income.

(d)Reflects losses related to equity investments which were subject to a restriction on sale that are included in investment earnings on the consolidated statements of comprehensive income.

(e)Reflects transmission revenues collected from customers in 2022 through Evergy Kansas Central's FERC TFR to be refunded to customers in accordance with a December 2022 FERC order that are included in operating revenues on the consolidated statements of comprehensive income.

(f)Reflects an income tax effect calculated at a statutory rate of approximately 22%.

ENVIRONMENTAL MATTERS

See Note 10 to the consolidated financial statements for information regarding environmental matters.

RELATED PARTY TRANSACTIONS

See Note 11 to the consolidated financial statements for information regarding related party transactions.

EVERGY RESULTS OF OPERATIONS

The following table summarizes Evergy's comparative results of operations.



Three Months Ended March 31	2023		Change		2022
	(millions)
Operating revenues	$	1,296.8	$	72.9	$	1,223.9
Fuel and purchased power	354.2		45.2		309.0
SPP network transmission costs	81.2		2.5		78.7
Operating and maintenance	216.3		(35.9)		252.2
Depreciation and amortization	263.4		34.4		229.0
Taxes other than income tax	102.4		0.5		101.9

Income from operations	279.3		26.2		253.1
Other expense, net	—		26.3		(26.3)
Interest expense	123.1		31.3		91.8
Income tax expense	12.4		0.9		11.5
Equity in earnings of equity method investees, net of income taxes	1.9		(0.2)		2.1
Net income	145.7		20.1		125.6
Less: Net income attributable to noncontrolling interests	3.1		—		3.1
Net income attributable to Evergy, Inc.	$	142.6	$	20.1	$	122.5

Gross Margin (GAAP) and Utility Gross Margin (non-GAAP)

The following table summarizes Evergy's gross margin (GAAP) and MWhs sold and reconciles Evergy's gross margin (GAAP) to Evergy's utility gross margin (non-GAAP). See "Executive Summary - Non-GAAP Measures", above for additional information regarding gross margin (GAAP) and utility gross margin (non-GAAP).


	Revenues and Expenses						MWhs Sold
Three Months Ended March 31	2023		Change		2022		2023	Change	2022
Retail revenues	(millions)						(thousands)
Residential	$	458.6	$	6.8	$	451.8	3,741	(194)	3,935
Commercial	430.0		26.9		403.1		4,311	55	4,256
Industrial	159.1		8.8		150.3		2,064	(49)	2,113
Other retail revenues	11.3		2.3		9.0		31	(1)	32
Total electric retail	1,059.0		44.8		1,014.2		10,147	(189)	10,336
Wholesale revenues	70.4		18.5		51.9		3,548	(352)	3,900
Transmission revenues	105.8		7.8		98.0		N/A	N/A	N/A
Other revenues	61.6		1.8		59.8		N/A	N/A	N/A
Operating revenues	1,296.8		72.9		1,223.9		13,695	(541)	14,236
Fuel and purchased power	(354.2)		(45.2)		(309.0)
SPP network transmission costs	(81.2)		(2.5)		(78.7)
Operating and maintenance(a)	(118.2)		13.2		(131.4)
Depreciation and amortization	(263.4)		(34.4)		(229.0)
Taxes other than income tax	(102.4)		(0.5)		(101.9)
Gross margin (GAAP)	377.4		3.5		373.9
Operating and maintenance(a)	118.2		(13.2)		131.4
Depreciation and amortization	263.4		34.4		229.0
Taxes other than income tax	102.4		0.5		101.9
Utility gross margin (non-GAAP)	$	861.4	$	25.2	$	836.2
(a) Operating and maintenance expenses which are deemed to be directly attributable to revenue-producing activities include plant operating and maintenance expenses at generating units and transmission and distribution operating and maintenance expenses and have been separately presented in order to calculate gross margin as defined under GAAP. These amounts exclude general and administrative expenses not directly attributable to revenue-producing activities of $98.1 million and $120.8 million for the three months ended March 31, 2023 and 2022, respectively.

Evergy's gross margin (GAAP) increased $3.5 million for the three months ended March 31, 2023, compared to the same period in 2022 and Evergy's utility gross margin (non-GAAP) increased $25.2 million for the three months ended March 31, 2023, compared to the same period in 2022, both measures were driven by:

a $11.8 million increase from new Evergy Metro and Evergy Missouri West retail rates effective in January 2023;
an $8.4 million increase due to mark-to-market gains related to forward contracts for natural gas and electricity entered into as economic hedges against fuel price volatility related to Evergy Kansas Central's non-regulated 8% ownership share of JEC;
a $7.8 million increase in transmission revenue primarily due to updated transmission costs reflected in Evergy Kansas Central's FERC TFR effective in January 2023 and revised in March 2023; and
a $6.4 million increase in operating revenue related to non-regulated energy marketing activity at Evergy Kansas Central; partially offset by
a $9.2 million decrease primarily due to lower retail sales driven by warmer winter weather in 2023 (heating degree days decreased by 11%) partially offset by higher weather-normalized residential and commercial demand.

Additionally, the increase in Evergy's gross margin (GAAP) was also driven by:

a $13.2 million decrease in operating and maintenance expenses which are determined to be directly attributable to revenue producing activities primarily driven by a $5.2 million decrease in plant operating and maintenance expense at fossil-fuel generating units, a $5.0 million decrease in plant operating and maintenance expense at Wolf Creek and a $2.5 million decrease in transmission and distribution operating and maintenance expenses as further described below; partially offset by
a $34.4 million increase in depreciation and amortization as further described below.

Operating and Maintenance

Evergy's operating and maintenance expense decreased $35.9 million for the three months ended March 31, 2023, compared to the same period in 2022, primarily driven by:

a $13.3 million decrease in administrative labor and employee benefits expenses primarily due to lower employee headcount compared to the first quarter of 2022;
a $5.9 million decrease in various administrative and general operating and maintenance expenses primarily due to lower regulatory amortizations at Evergy Metro and Evergy Missouri West as a result of their 2022 rate cases;
a $5.2 million decrease in plant operating and maintenance expense at fossil-fuel generating units primarily due to a $3.6 million decrease at Evergy Kansas Central driven by a major maintenance outage at JEC in 2022;
a $5.0 million decrease in plant operating and maintenance expense at Wolf Creek at Evergy Kansas Central and Evergy Metro primarily due to lower refueling outage amortization in 2023 and lower labor expense in 2023 driven by an increase in labor capitalization and lower employee headcount;
a $2.5 million decrease in transmission and distribution operating and maintenance expenses primarily at Evergy Kansas Central driven by lower labor expense primarily due to an increase in labor capitalization and lower employee headcount, partially offset by a $3.6 million increase in vegetation management costs; partially offset by
a $3.7 million increase in property insurance expense due to a lower annual refund of nuclear insurance premiums received by Evergy Kansas Central and Evergy Metro in 2023 related to their ownership interest in Wolf Creek.

Depreciation and Amortization

Evergy's depreciation and amortization expense increased $34.4 million for the three months ended March 31, 2023, compared to the same period in 2022, primarily driven by:

a $23.5 million increase primarily due to capital additions; and
a $10.9 million increase primarily due to a change in depreciation rates as a result of Evergy Metro's and Evergy Missouri West's 2022 rate cases effective in January 2023.

Other Expense, Net

Evergy's other expense, net decreased $26.3 million for the three months ended March 31, 2023, compared to the same period in 2022, primarily driven by:

an $18.7 million increase in investment earnings primarily driven by a $14.2 million loss from the sale of Evergy's equity investment in an early-stage energy solutions company in 2022 and a $5.8 million increase in interest and dividend income primarily due to an increase in carrying charges related to Evergy Missouri West's costs associated with the February 2021 winter weather event to be recovered through securitization financing; partially offset by a $4.7 million decrease in unrealized gains due to the change in fair value related to other equity investments;
an $8.1 million decrease due to recording higher Evergy Kansas Central corporate-owned life insurance (COLI) benefits in 2023; and
a $3.6 million decrease in pension non-service costs.

Interest Expense

Evergy's interest expense increased $31.3 million for the three months ended March 31, 2023, compared to the same period in 2022, primarily driven by a $27.5 million increase in interest expense on short-term borrowings primarily due to higher short-term debt balances and weighted-average interest rates for Evergy Kansas Central, Evergy Metro and Evergy Missouri West in 2023.

LIQUIDITY AND CAPITAL RESOURCES

Evergy relies primarily upon cash from operations, short-term borrowings, long-term debt and equity issuances and its existing cash and cash equivalents to fund its capital requirements. Evergy's capital requirements primarily consist of capital expenditures, payment of contractual obligations and other commitments, and the payment of dividends to shareholders. See the Evergy Companies' combined 2022 Form 10-K for more information on Evergy's sources and uses of cash.

Short-Term Borrowings

As of March 31, 2023, Evergy had $952.8 million of available borrowing capacity under its master credit facility. The available borrowing capacity under the master credit facility consisted of $152.3 million for Evergy, Inc., $477.0 million for Evergy Kansas Central, $229.0 million for Evergy Metro and $94.5 million for Evergy Missouri West. The Evergy Companies' borrowing capacity under the master credit facility also supports their issuance of commercial paper. See Note 6 to the consolidated financial statements for more information regarding the master credit facility.

In February 2022, Evergy, Inc. entered into a $500.0 million unsecured Term Loan Facility that originally expired in February 2023. In February 2023, Evergy, Inc. amended the $500.0 million Term Loan Facility to extend the expiration date to February 2024. As a result of the amendment, Evergy, Inc. demonstrated its intent and ability to refinance the Term Loan Facility and reflected this $500.0 million borrowing within long-term debt, net, on Evergy's consolidated balance sheet as of December 31, 2022. As of March 31, 2023, Evergy had borrowed $500.0 million under the Term Loan Facility that is reflected within notes payable and commercial paper on Evergy's consolidated balance sheet. Evergy's borrowings under the Term Loan Facility were used for, among other things, working capital, capital expenditures and general corporate purposes.

Along with cash flows from operations and receivable sales facilities, Evergy generally uses borrowings under its master credit facility and the issuance of commercial paper to meet its day-to-day cash flow requirements. Evergy may also utilize these short-term borrowings to repay maturing long-term debt until the long-term debt is able to be refinanced. Evergy believes that its existing cash on hand and available borrowing capacity under its master credit facility provide sufficient liquidity for its existing capital requirements.

Significant Debt Issuances

See Note 7 to the consolidated financial statements for information regarding significant debt issuances.

Pensions

For the three months ended March 31, 2023, Evergy made pension contributions of $16.4 million. Evergy expects to make additional pension contributions of $22.0 million in 2023 to satisfy ERISA funding requirements and KCC and MPSC rate orders, of which $14.4 million is expected to be paid by Evergy Kansas Central and $7.6 million is expected to be paid by Evergy Metro. Also in 2023, Evergy expects to make additional post-retirement benefit contributions of $1.6 million.

Debt Covenants

As of March 31, 2023, Evergy was in compliance with all debt covenants under the master credit facility, the Term Loan Facility and certain debt instruments that contain restrictions that require the maintenance of certain capitalization and leverage ratios. See Note 6 to the consolidated financial statements for more information.

Cash Flows

The following table presents Evergy's cash flows from operating, investing and financing activities.



Three Months Ended March 31	2023		2022
	(millions)
Cash Flows from Operating Activities	$	362.9	$	265.1
Cash Flows used in Investing Activities	(496.9)		(531.3)
Cash Flows from Financing Activities	137.2		262.2

Cash Flows from Operating Activities

Evergy's cash flows from operating activities increased $97.8 million for the three months ended March 31, 2023, compared to the same period in 2022, primarily driven by an increase in cash receipts for retail electric sales in 2023 primarily due to collection of higher December receivables in January 2023 and increases from new Evergy Metro and Evergy Missouri West retail rates effective in January 2023.

Cash Flows used in Investing Activities

Evergy's cash flows used in investing activities decreased $34.4 million for the three months ended March 31, 2023, compared to the same period in 2022, primarily driven by an increase in proceeds from COLI investments at Evergy Kansas Central due to a higher number of policy settlements in 2023.

Cash Flows from Financing Activities

Evergy's cash flows from financing activities decreased $125.0 million for the three months ended March 31, 2023, compared to the same period in 2022, primarily driven by:

a $200.0 million decrease due to higher retirements of long-term debt, net due to Evergy Metro's repayment of $300.0 million of 3.15% Senior Notes in March 2023, partially offset by Evergy Missouri West's repayment of $100.0 million of 3.74% Senior Notes in March 2022;
a $32.5 million repayment of borrowings against cash surrender value of corporate-owned life insurance in 2023 due to settlements; and
a $18.7 million decrease in short-term debt borrowings driven by higher borrowings in 2022 for general corporate purposes; partially offset by
a $146.3 million increase in proceeds from long-term debt, net due to Evergy Kansas Central's issuance of $400.0 million of 5.70% FMBs in March 2023; partially offset by Evergy Missouri West's issuance of $250.0 million of 3.75% FMBs in March 2022.

EVERGY KANSAS CENTRAL, INC.

MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

The below results of operations and related discussion for Evergy Kansas Central is presented in a reduced disclosure format in accordance with General Instruction (H)(2)(a) to Form 10-Q.

The following table summarizes Evergy Kansas Central's comparative results of operations.


Three Months Ended March 31	2023		Change		2022
	(millions)
Operating revenues	$	678.6	$	64.7	$	613.9
Fuel and purchased power	144.4		36.3		108.1
SPP network transmission costs	81.2		2.5		78.7
Operating and maintenance	107.6		(18.1)		125.7
Depreciation and amortization	124.1		4.4		119.7
Taxes other than income tax	55.7		1.2		54.5
Income from operations	165.6		38.4		127.2
Other income (expense), net	0.6		9.2		(8.6)
Interest expense	52.4		11.5		40.9
Income tax expense	8.4		4.8		3.6
Equity in earnings of equity method investees, net of income taxes	1.0		—		1.0
Net income	106.4		31.3		75.1
Less: Net income attributable to noncontrolling interests	3.1		—		3.1
Net income attributable to Evergy Kansas Central, Inc.	$	103.3	$	31.3	$	72.0

Evergy Kansas Central Gross Margin (GAAP) and Utility Gross Margin (non-GAAP)

The following table summarizes Evergy Kansas Central's gross margin (GAAP) and MWhs sold and reconciles Evergy Kansas Central's gross margin (GAAP) to Evergy Kansas Central's utility gross margin (non-GAAP). See "Executive Summary - Non-GAAP Measures" for additional information regarding gross margin (GAAP) and utility gross margin (non-GAAP).


	Revenues and Expenses						MWhs Sold
Three Months Ended March 31	2023		Change		2022		2023	Change	2022
Retail revenues	(millions)						(thousands)
Residential	$	192.1	$	(4.0)	$	196.1	1,452	(97)	1,549
Commercial	178.1		12.9		165.2		1,672	35	1,637
Industrial	108.5		7.7		100.8		1,319	(51)	1,370
Other retail revenues	4.3		0.2		4.1		10	—	10
Total electric retail	483.0		16.8		466.2		4,453	(113)	4,566
Wholesale revenues	67.6		17.5		50.1		2,644	283	2,361
Transmission revenues	100.6		13.1		87.5		N/A	N/A	N/A
Other revenues	27.4		17.3		10.1		N/A	N/A	N/A
Operating revenues	678.6		64.7		613.9		7,097	170	6,927
Fuel and purchased power	(144.4)		(36.3)		(108.1)
SPP network transmission costs	(81.2)		(2.5)		(78.7)
Operating and maintenance (a)	(53.9)		11.1		(65.0)
Depreciation and amortization	(124.1)		(4.4)		(119.7)
Taxes other than income tax	(55.7)		(1.2)		(54.5)
Gross margin (GAAP)	219.3		31.4		187.9
Operating and maintenance (a)	53.9		(11.1)		65.0
Depreciation and amortization	124.1		4.4		119.7
Taxes other than income tax	55.7		1.2		54.5
Utility gross margin (non-GAAP)	$	453.0	$	25.9	$	427.1
(a) Operating and maintenance expenses which are deemed to be directly attributable to revenue-producing activities include plant operating and maintenance expenses at generating units and transmission and distribution operating and maintenance expenses and have been separately presented in order to calculate gross margin as defined under GAAP. These amounts exclude general and administrative expenses not directly attributable to revenue-producing activities of $53.7 million and $60.7 million for the three months ended March 31, 2023 and 2022, respectively.

Evergy Kansas Central's gross margin (GAAP) increased $31.4 million for the three months ended March 31, 2023, compared to the same period in 2022, and Evergy Kansas Central's utility gross margin (non-GAAP) increased $25.9 million for the three months ended March 31, 2023, compared to the same period in 2022, both measures were driven by:

a $13.1 million increase in transmission revenue primarily due to updated transmission costs reflected in Evergy Kansas Central's FERC TFR effective in January 2023 and revised in March 2023;
an $8.4 million increase due to mark-to-market gains related to forward contracts for natural gas and electricity entered into as economic hedges against fuel price volatility related to Evergy Kansas Central's non-regulated 8% ownership share of JEC;
a $6.4 million increase in operating revenue related to non-regulated energy marketing activity at Evergy Kansas Central; partially offset by
a $2.0 million decrease primarily due to lower retail sales driven by warmer winter weather (heating degree days decreased by 11%); partially offset by higher weather-normalized residential and commercial demand.

Additionally, the increase in Evergy Kansas Central's gross margin (GAAP) was also driven by:

an $11.1 million decrease in operating and maintenance expenses which are determined to be directly attributable to revenue producing activities primarily driven by a $3.7 million decrease in operating and maintenance expense at fossil-fuel generating units, a $2.4 million decrease in operating and maintenance expense at Wolf Creek and a $3.8 million decrease in transmission and distribution operating and maintenance expenses as described further below; partially offset by
a $4.4 million increase in depreciation and amortization expense as described further below.

Evergy Kansas Central Operating and Maintenance

Evergy Kansas Central's operating and maintenance expense decreased $18.1 million for the three months ended March 31, 2023, compared to the same period in 2022, primarily driven by:

a $6.8 million decrease in administrative labor and employee benefits expenses primarily due to lower employee headcount compared to the first quarter of 2022;
a $3.8 million decrease in various transmission and distribution operating and maintenance expenses primarily due to lower labor costs driven by an increase in labor capitalization and lower employee headcount, partially offset by a $2.5 million increase in vegetation management costs;
a $3.7 million decrease in plant operating and maintenance expense at fossil-fuel generating units primarily driven by a major maintenance outage at JEC in 2022; and
a $2.4 million decrease in plant operating and maintenance expense at Wolf Creek primarily due to lower refueling outage amortization in 2023 and lower labor costs in 2023 driven by an increase in labor capitalization and lower employee headcount; partially offset by
a $1.9 million increase in property insurance expense due to a lower annual refund of nuclear insurance premiums received in 2023 related to Evergy Kansas Central's ownership interest in Wolf Creek; and
a $1.8 million increase in costs billed for common use assets in 2023 from Evergy Metro related to facilities and software assets.

Evergy Kansas Central Depreciation and Amortization

Evergy Kansas Central's depreciation and amortization expense increased $4.4 million for the three months ended March 31, 2023, compared to the same period in 2022, primarily driven by higher capital additions in 2023.

Evergy Kansas Central Other Expense, Net

Evergy Kansas Central's other expense, net in the first quarter of 2022 became other income, net in the first quarter of 2023 as a result of a $9.2 million increase in net other income items primarily driven by:

a $8.1 million increase due to recording higher COLI benefits in 2023;
a $2.9 million increase in net unrealized gains in Evergy Kansas Central's rabbi trust.

Evergy Kansas Central Interest Expense

Evergy Kansas Central's interest expense increased $11.5 million for the three months ended March 31, 2023, compared to the same period in 2022, primarily driven by a $10.1 million increase in interest expense on short-term borrowings primarily due to higher short-term debt balances and weighted-average interest rates in 2023.

Evergy Kansas Central Income Tax Expense

Evergy Kansas Central's income tax expense increased $4.8 million for the three months ended March 31, 2023, compared to the same period in 2022, primarily driven by:

an $8.0 million increase due to higher pre-tax income in 2023; partially offset by
a $2.1 million decrease primarily due to higher expected COLI proceeds in 2023; and
a $1.6 million decrease due to higher wind and other income tax credits in 2023.

EVERGY METRO, INC.

MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

The below results of operations and related discussion for Evergy Metro is presented in a reduced disclosure format in accordance with General Instruction (H)(2)(a) to Form 10-Q.

The following table summarizes Evergy Metro's comparative results of operations.


Three Months Ended March 31	2023		Change		2022
	(millions)
Operating revenues	$	406.4	$	(16.1)	$	422.5
Fuel and purchased power	115.4		(17.1)		132.5
Operating and maintenance	65.3		(12.8)		78.1
Depreciation and amortization	102.4		19.5		82.9
Taxes other than income tax	33.5		0.1		33.4

Income from operations	89.8		(5.8)		95.6
Other expense, net	(5.5)		0.8		(6.3)
Interest expense	30.6		3.6		27.0
Income tax expense	6.9		(0.8)		7.7
Net income	$	46.8	$	(7.8)	$	54.6

Evergy Metro Gross Margin (GAAP) and Utility Gross Margin (non-GAAP)

The following table summarizes Evergy Metro's gross margin (GAAP) and MWhs sold and reconciles Evergy Metro's gross margin (GAAP) to Evergy Metro's utility gross margin (non-GAAP). See "Executive Summary - Non-GAAP Measures" for additional information regarding gross margin (GAAP) and utility gross margin (non-GAAP).


	Revenues and Expenses						MWhs Sold
Three Months Ended March 31	2023		Change		2022		2023	Change	2022
Retail revenues	(millions)						(thousands)
Residential	$	158.0	(1.9)		$	159.9	1,329	(54)	1,383
Commercial	175.9		2.3		173.6		1,806	(3)	1,809
Industrial	28.4		(0.4)		28.8		399	—	399
Other retail revenues	2.7		0.1		2.6		17	—	17
Total electric retail	365.0		0.1		364.9		3,551	(57)	3,608
Wholesale revenues	11.4		3.7		7.7		826	(622)	1,448
Transmission revenues	3.8		(1.6)		5.4		N/A	N/A	N/A
Other revenues	26.2		(18.3)		44.5		N/A	N/A	N/A
Operating revenues	406.4		(16.1)		422.5		4,377	(679)	5,056
Fuel and purchased power	(115.4)		17.1		(132.5)
Operating and maintenance (a)	(47.6)		2.7		(50.3)
Depreciation and amortization	(102.4)		(19.5)		(82.9)
Taxes other than income tax	(33.5)		(0.1)		(33.4)
Gross margin (GAAP)	107.5		(15.9)		123.4
Operating and maintenance (a)	47.6		(2.7)		50.3
Depreciation and amortization	102.4		19.5		82.9
Taxes other than income tax	33.5		0.1		33.4
Utility gross margin (non-GAAP)	$	291.0	$	1.0	$	290.0
(a) Operating and maintenance expenses which are deemed to be directly attributable to revenue-producing activities include plant operating and maintenance expenses at generating units and transmission and distribution operating and maintenance expenses and have been separately presented in order to calculate gross margin as defined under GAAP. These amounts exclude general and administrative expenses not directly attributable to revenue-producing activities of $17.7 million and $27.8 million for the three months ended March 31, 2023 and 2022, respectively.

Evergy Metro's gross margin (GAAP) decreased $15.9 million for the three months ended March 31, 2023, compared to the same period in 2022 and Evergy Metro's utility gross margin (non-GAAP) increased $1.0 million for the three months ended March 31, 2023, compared to the same period in 2022, both measures were driven by:

a $3.7 million decrease primarily due to lower retail sales driven by warmer winter weather (heating degree days decreased by 11%) partially offset by higher weather-normalized residential and commercial demand; partially offset by
a $4.7 million increase from new Evergy Metro retail rates effective in January 2023.

Additionally, the decrease in Evergy Metro's gross margin (GAAP) was also partially offset by:

a $19.5 million increase in depreciation and amortization expense as described further below; partially offset by
a $2.7 million decrease in operating and maintenance expenses which are determined to be directly attributable to revenue producing activities primarily driven by a $2.6 million decrease in plant operating and maintenance expense at Wolf Creek as further described below.

Evergy Metro Operating and Maintenance

Evergy Metro's operating and maintenance expense decreased $12.8 million for the three months ended March 31, 2023, compared to the same period in 2022, primarily driven by:

a $4.2 million decrease in administrative labor and employee benefits expenses primarily due to lower employee headcount compared to the first quarter of 2022;
a $3.7 million decrease in various administrative and general operating and maintenance expenses primarily driven by lower regulatory amortizations as a result of Evergy Metro's 2022 rate case;
a $2.6 million decrease in plant operating and maintenance expense at Wolf Creek primarily due to lower refueling outage amortizations in 2023 and lower labor costs driven by an increase in labor capitalization and lower employee headcount; and
a $1.4 million decrease due to higher costs billed for common use assets in 2022, primarily to Evergy Kansas Central related to facilities and software assets; partially offset by
a $1.8 million increase in property insurance expense due to a lower annual refund of nuclear insurance premiums received in 2023 related to Evergy Metro's ownership interest in Wolf Creek.

Evergy Metro Depreciation Expense

Evergy Metro's depreciation and amortization expense increased $19.5 million for the three months ended March 31, 2023, compared to the same period in 2022, primarily driven by:

a $12.4 million increase primarily due to capital additions; and
a $7.1 million increase due to a change in depreciation rates as a result of Evergy Metro's 2022 rate case effective in January 2023.

Evergy Metro Interest Expense

Evergy Metro's interest expense increased $3.6 million for the three months ended March 31, 2023, compared to the same period in 2022, primarily driven by a $4.3 million increase in interest expense on short-term borrowings primarily due to higher short-term debt balances and weighted-average interest rates in 2023.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the ordinary course of business, Evergy faces risks that are either non-financial or non-quantifiable. Such risks principally include business, legal, operational and credit risks and are discussed elsewhere in this report as well as in the Evergy Companies' combined 2022 Form 10-K and therefore are not represented here.

Evergy's interim period disclosures about market risk included in quarterly reports on Form 10-Q address material changes, if any, from the most recently filed annual report on Form 10-K. Therefore, these interim period disclosures should be read in conjunction with Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk included in the Evergy Companies' combined 2022 Form 10-K. Evergy's exposure to market risk has not changed materially since December 31, 2022.

Item 4. CONTROLS AND PROCEDURES

EVERGY

Disclosure Controls and Procedures

Evergy carried out an evaluation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). This evaluation was conducted under the supervision, and with the participation, of Evergy's management, including the chief executive officer and chief financial officer, and Evergy's disclosure committee. Based upon this evaluation, the chief executive officer and chief financial officer of Evergy have concluded as of the end of the period covered by this report that the disclosure controls and procedures of Evergy were effective at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There has been no change in Evergy’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarterly period ended March 31, 2023, that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

EVERGY KANSAS CENTRAL

Disclosure Controls and Procedures

Evergy Kansas Central carried out an evaluation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). This evaluation was conducted under the supervision, and with the participation, of Evergy Kansas Central's management, including the chief executive officer and chief financial officer, and Evergy Kansas Central's disclosure committee. Based upon this evaluation, the chief executive officer and chief financial officer of Evergy Kansas Central have concluded as of the end of the period covered by this report that the disclosure controls and procedures of Evergy Kansas Central were effective at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There has been no change in Evergy Kansas Central’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarterly period ended March 31, 2023, that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

EVERGY METRO

Disclosure Controls and Procedures

Evergy Metro carried out an evaluation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). This evaluation was conducted under the supervision, and with the participation, of Evergy Metro's management, including the chief executive officer and chief financial officer, and Evergy Metro's disclosure committee. Based upon this evaluation, the chief executive officer and chief financial officer of Evergy Metro have concluded as of the end of the period covered by this report that the disclosure controls and procedures of Evergy Metro were effective at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There has been no change in Evergy Metro’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarterly period ended March 31, 2023, that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Other Proceedings

The Evergy Companies are parties to various lawsuits and regulatory proceedings in the ordinary course of their respective businesses. For information regarding material lawsuits and proceedings, see Notes 4 and 10 to the consolidated financial statements. Such information is incorporated herein by reference.

Item 1A. RISK FACTORS

Actual results in future periods for the Evergy Companies could differ materially from historical results and the forward-looking statements contained in this report. The business of the Evergy Companies is influenced by many factors that are difficult to predict, involve uncertainties that may materially affect actual results and are often beyond their control. Additional risks and uncertainties not presently known or that management currently believes to be immaterial may also adversely affect the Evergy Companies. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in Part I, Item 1A, Risk Factors included in the 2022 Form 10-K for each of Evergy, Evergy Kansas Central and Evergy Metro, as well as Quarterly Reports on Form 10-Q and from time to time in Current Reports on Form 8-K filed by Evergy, Evergy Kansas Central and

Evergy Metro. There have been no material changes with regards to those risk factors since the filing of the 2022 Form 10-K for each of Evergy, Evergy Kansas Central and Evergy Metro. This information, as well as the other information included in this report and in the other documents filed with the SEC, should be carefully considered before making an investment in the securities of the Evergy Companies. Risk factors of Evergy Kansas Central and Evergy Metro are also risk factors of Evergy.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities

The following table provides information regarding purchases by Evergy of its equity securities that are registered pursuant to Section 12 of the Exchange Act during the three months ended March 31, 2023.


Issuer Purchases of Equity Securities
Month	Total Number of Shares (or Units) Purchased(a)	Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
January 1 - 31	—	$	—	—	—
February 1 - 28	6,488	60.93		—	—
March 1 - 31	32,604	60.04		—	—
Total	39,092	$	60.19	—	—

(a) Represents shares Evergy purchased for withholding taxes related to the vesting of restricted stock units.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

Annual Shareholder Meeting Results

Evergy's annual meeting of shareholders was held on May 2, 2023. In accordance with the recommendations of the Board, the shareholders (i) elected eleven directors; (ii) approved, on an advisory and non-binding basis, the 2022 compensation of Evergy's named executive officers; and (iii) ratified the appointment of Deloitte & Touche LLP as independent registered public accountants for 2023. The proposals voted upon at the annual meeting, as well as the voting results for each proposal are set forth below.

Item 1 on the Proxy Card. The eleven persons named below were elected, as proposed in the proxy statement, to serve as directors until Evergy's annual meeting in 2024, and until their successors are elected and qualified. The voting regarding the election was as follows:


	Number of Votes
		For	Against	Abstain	Broker Non-Votes
David A. Campbell		179,091,739	1,800,824	376,750	21,666,048
Thomas D. Hyde		175,784,094	5,057,304	427,915	21,666,048
B. Anthony Isaac		177,218,794	3,615,419	435,100	21,666,048
Paul M. Keglevic		178,897,459	1,931,123	440,731	21,666,048
Mary L. Landrieu		178,896,460	1,877,669	495,184	21,666,048
Sandra A.J. Lawrence		161,654,213	19,201,711	413,389	21,666,048
Ann D. Murtlow		178,725,830	2,117,555	425,928	21,666,048
Sandra J. Price		177,184,197	3,662,610	422,506	21,666,048
Mark A. Ruelle		174,153,974	6,732,808	382,531	21,666,048
James Scarola		180,013,693	824,820	430,800	21,666,048
C. John Wilder		176,037,399	4,794,935	436,979	21,666,048

Item 2 on the Proxy Card. In an advisory and non-binding "say on pay" vote, shareholders approved the 2022 compensation of Evergy's named executive officers, with the following vote:


Number of Votes
For	Against	Abstain	Broker Non-Votes
173,989,500	6,479,331	800,482	21,666,048

Item 3 on the Proxy Card. Shareholders voted for the ratification and confirmation of the appointment of Deloitte & Touche LLP as Evergy's independent registered public accounting firm for 2023, with the following vote:


Number of Votes
For	Against	Abstain	Broker Non-Votes
197,521,839	4,927,348	486,174	0

Available Information

Item 6. EXHIBITS


Exhibit Number		Description of Document	Registrant

4.1	*	Nineteenth Supplemental Indenture, dated as of April 4, 2023, between Evergy Metro and UMB Bank, N.A. (formerly United Missouri Bank of Kansas City, N.A.), as trustee (Exhibit 4.1 to Evergy's and E vergy Metro 's Form 8-K filed on April 6, 2023).	Evergy Evergy Metro

4.2	*	Fifty-First Supplemental Indenture, dated as of March 14, 2023, between Evergy Kansas Central, Inc. and The Bank of New York Mellon Trust company, N.A., as trustee (Exhibit 4.1 to Evergy's and Evergy Kansas Central's Form 8-K filed on March 14, 2023	Evergy Evergy Kansas Central

10.1	*	F irst Amendment to Term Loan Credit Agreement, dated as of February 23, 2023, by and among Evergy, Inc., Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (Exhibit 10.1 to Evergy's Form 8-K filed February 27, 2023).	Evergy

10.2	*+	Form of Evergy, Inc. 2023 Performance-Based Restricted Stock Unit Agreement (Exhibit 10.9 to Evergy's Form 10-K for the period ended December 31, 2022).	Evergy Evergy Kansas Central Evergy Metro

10.3	*+	F orm of Evergy, Inc. 2023 Time-Based Restricted Stock Unit Agreement (Exhibit 10.10 to Evergy's Form 10-K for the period ended December 31, 2022 ).	Evergy Evergy Kansas Central Evergy Metro

10.4	*+	Evergy, Inc. 2023 Annual Incentive Plan (Exhibit 10.13 to Evergy's Form 10-K for the period ended December 31, 2022).	Evergy Evergy Kansas Central Evergy Metro

10.5	*+	Evergy, Inc. Amended and Restated Nonqualified Deferred Compensation Plan, effective January 1, 2023 (Exhibit 10.26 to Evergy's Form 10-K for the period ended December 31, 2022).	Evergy Evergy Kansas Central Evergy Metro

10.6	+	Summary of Evergy, Inc. Non-Employee Director Compensation.	Evergy

31.1		Rule 13a-14(a)/15d-14(a) Certification of David A. Campbell.	Evergy

31.2		Rule 13a-14(a)/15d-14(a) Certification of Kirkland B. Andrews.	Evergy

31.3		Rule 13a-14(a)/15d-14(a) Certification of David A. Campbell.	Evergy Metro

31.4		Rule 13a-14(a)/15d-14(a) Certification of Kirkland B. Andrews.	Evergy Metro

31.5		Rule 13a-14(a)/15d-14(a) Certification of David A. Campbell.	Evergy Kansas Central

31.6		Rule 13a-14(a)/15d-14(a) Certification of Kirkland B. Andrews.	Evergy Kansas Central

32.1	**	Section 1350 Certifications.	Evergy

32.2	**	Section 1350 Certifications.	Evergy Metro

32.3	**	Section 1350 Certifications.	Evergy Kansas Central

101.INS	***	XBRL Instance Document.	n/a

101.SCH		Inline XBRL Taxonomy Extension Schema Document.	Evergy Evergy Kansas Central Evergy Metro

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.	Evergy Evergy Kansas Central Evergy Metro


101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.	Evergy Evergy Kansas Central Evergy Metro

101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document.	Evergy Evergy Kansas Central Evergy Metro

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.	Evergy Evergy Kansas Central Evergy Metro

104	Cover Page Interactive Data File (embedded within the Inline XBRL document).	Evergy Evergy Kansas Central Evergy Metro

Filed with the SEC as exhibits to prior SEC filings and are incorporated herein by reference and made a part hereof. The SEC filings and the exhibit number of the documents so filed, and incorporated herein by reference, are stated in parenthesis in the description of such exhibit.

** Furnished and shall not be deemed filed for the purpose of Section 18 of the Exchange Act. Such document shall not be incorporated by reference into any registration statement or other document pursuant to the Exchange Act or the Securities Act of 1933, as amended, unless otherwise indicated in such registration statement or other document.

*** The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

+ Indicates management contract or compensatory plan or arrangement.

Copies of any of the exhibits filed with the SEC in connection with this document may be obtained from Evergy, Evergy Kansas Central or Evergy Metro, as applicable, upon written request.

The registrants agree to furnish to the SEC upon request any instrument with respect to long-term debt as to which the total amount of securities authorized does not exceed 10% of total assets of such registrant and its subsidiaries on a consolidated basis.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, Evergy, Inc., Evergy Kansas Central, Inc. and Evergy Metro, Inc. have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized.


		EVERGY, INC.

Dated:	May 4, 2023	By: /s/ Kirkland B. Andrews
		(Kirkland B. Andrews)
		(Executive Vice President and Chief Financial Officer)


		EVERGY KANSAS CENTRAL, INC.

Dated:	May 4, 2023	By: /s/ Kirkland B. Andrews
		(Kirkland B. Andrews)
		(Executive Vice President and Chief Financial Officer)


		EVERGY METRO, INC.

Dated:	May 4, 2023	By: /s/ Kirkland B. Andrews
		(Kirkland B. Andrews)
		(Executive Vice President and Chief Financial Officer)