Evergy, Inc. (EVRG) | The Buildout — AI Infrastructure
The Verdict
Evergy is a regulated electric utility holding company, not a technology company. Its subsidiaries sell firm electric power in Kansas and Missouri, and its link to the AI buildout is on the demand side: data centers locate in its territory, draw power under long-dated contracts, and that load is monetized through the regulated rate base. Management's pitch is that the Kansas City metro is well positioned for the national power-infrastructure and data-center investment cycle, and that its Large Load Power Service tariff lets large customers pay a premium rate while covering their share of system costs. The business earns its return by building generation, transmission, and distribution to serve the load it signs.
| Market Cap | — |
| Revenue (TTM) | $6.1B |
| Revenue Growth | +4.1% |
| EBITDA Margin (TTM) | 45.7% |
| Net Debt | $16.5B |
| Earnings Beats | 3 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Five signed data-center ESAs under the LLPS tariff total about 2.5 GW of steady-state peak load; adding roughly 500 MW of non-LLPS large load brings the total to about 3 GW.
- Contract protections include minimum monthly bill provisions spanning 16-17 years, whether or not capacity is fully utilized, plus a five-year ramp-rate provision and a 10- to 12-year peak provision.
- Tier 1 expansion opportunities were raised to 2.0-2.5 GW from 1-1.5 GW in a single quarter, and the remaining pipeline is described as 'well over 10 additional gigawatts' — both excluded from the five-year plan.
- Guidance was raised on three fronts: retail load growth CAGR to 7%-8% from ~6%, rate base CAGR to ~12% from 11.5%, and FFO-to-debt to 14%-15% for 2026-2028.
- In the Missouri Metro rate case, Evergy cut its requested revenue requirement by $25M, about 15%, because of data centers, and expects the relative reduction to grow at true-up.
What We’re Watching
- Management is 'highly confident' of at least one more ESA in 2026, with details expected on the Q3 call in November 2026.
- Tier 2 advanced discussions narrowed to 1-2 GW from 1.5-3 GW, and management did not explain the change.
- The nuclear PTC flowback — more than $100M per year expected to be monetized — went silent on the Q2 call after being a named Q1 affordability driver.
- Missouri West customers may see rate increases above inflation over the next five years — the exception to the affordability narrative.
The thesis reads as strengthening. The signed large-load base grew to five ESAs, the Tier 1 expansion bucket doubled in a quarter, and rate base, load growth, and credit guidance were all raised. The near-term guide was reaffirmed and the Q2 result came in above the prior quarter's implied guide. The open question is conversion: how much of the pipeline outside the five-year plan becomes signed agreements, and whether the unexplained Tier 2 narrowing reflects attrition or re-bucketing.
Earnings
Evergy's Q2 2026 revenue was $1,500.1M at a 25.4% gross margin. Adjusted earnings were $208.5M, or $0.88 per diluted share, versus $191.1M and $0.82 a year ago; GAAP earnings were $215.0M, or $0.91, versus $171.3M and $0.74. Management said the quarter keeps 2026 on track for the $4.24 midpoint. The standout metric was the combined contribution from the large data center that started in March and Panasonic's ramp — about $0.04 of EPS, up from roughly $0.02 in Q1.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $1.5B | $1.4B | $1.4B | +5.1% |
| Gross margin | 25.4% | 67.5% | 30.7% | -530bps |
| EBITDA | $685M | $624M | $638M | +7.3% |
| EPS | $0.91 | $0.64 | $0.74 | +23.5% |
| Data center + Panasonic EPS | $0.04 | $0.02 | n/a | — |
| Signed data-center ESAs | 5 | 4 | n/a | — |
Few regions in the United States are as well positioned to benefit from the accelerating national investment cycle in power infrastructure and data centers as the Kansas City metropolitan area.— David Campbell, 2026-08-06
Management tone: Management's tone on the large-load story strengthened between the two calls. On the Q1 call they said they expected at least one additional ESA in 2026; on Q2 that became 'highly confident that we'll execute at least one more ESA in 2026.' The Tier 1 expansion bucket was raised, the Missouri West above-inflation trajectory was volunteered, and the Metro data-center credit was quantified at $25M. Two prior items went silent: the nuclear PTC flowback on Q2 and the 50%-60% dividend payout ratio on Q1.
Management Guidance
Management reaffirmed 2026 adjusted EPS guidance of $4.14-$4.34 with a $4.24 midpoint and initiated Q3 2026 guidance at 50%-53% of that midpoint. Longer term it reaffirmed 6%-8%+ adjusted EPS growth through 2030 off the 2026 midpoint, with more than 8% annually beginning in 2028, and a retail load growth CAGR of 7%-8% through 2030. The five-year capital plan stands at $21.6B plus roughly $1B of incremental generation capital from the 2026 IRP preferred plans, supporting a rate base CAGR of about 12%. FFO-to-debt is guided to 14%-15% for 2026-2028, with further strength in the outer years. The company does not provide a GAAP equivalent for its adjusted EPS guidance.
Trajectory
Evergy's revenue swings with the seasons — roughly one-third of retail revenues fall in the third quarter — so quarterly totals move from $1,796M in Q3 2025 to $1,328M in Q4 2025, then $1,444M in Q1 2026 and $1,500M in Q2 2026. Trailing revenue growth is about 4.1% year over year. Gross margin has been expanding while operating and EBITDA margins have compressed slightly, a pattern that fits a capital build adding depreciation and interest ahead of the earnings. Free cash flow is negative, with trailing free cash flow at minus 124% of net income as the capital program runs ahead of cash generation. The contracted large-load contribution is still early — one large data center started in March 2026 and Panasonic is ramping.
The Model
The model projects FY+1 revenue of $6,211.4M and EBITDA of $2,854M, a 45.95% margin, and FY+2 revenue of $6,600.0M and EBITDA of $3,059M, a 46.35% margin. The near-term anchor is the contracted large-load ramp already in operation — one data center started in March 2026 and Panasonic is ramping — plus new retail rates and the capital program. FY+2 leans on the guided retail load growth CAGR of 7%-8% through 2030 and a rate base CAGR of about 12%, with the 250 basis-point lag between rate base and earnings growth shaping how quickly the investment converts to earnings.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $5.9B | $6.2B | $6.6B |
| YoY Growth | — | +4.9% | +6.3% |
| EBITDA | $2.7B | $2.9B | $3.1B |
| EBITDA Margin | 45.5% | 46.0% | 46.3% |
Projections are the median of 4 independent model runs. The model’s revenue sits 2.1% above analyst consensus.
Management reaffirmed 2026 adjusted EPS guidance of $4.14-$4.34 with a $4.24 midpoint and initiated Q3 2026 guidance at 50%-53% of that midpoint. Longer term it reaffirmed 6%-8%+ adjusted EPS growth through 2030 off the 2026 midpoint, with more than 8% annually beginning in 2028, and a retail load growth CAGR of 7%-8% through 2030. The five-year capital plan stands at $21.6B plus roughly $1B of incremental generation capital from the 2026 IRP preferred plans, supporting a rate base CAGR of about 12%. FFO-to-debt is guided to 14%-15% for 2026-2028, with further strength in the outer years. The company does not provide a GAAP equivalent for its adjusted EPS guidance.
What Could Go Right — and Wrong
- A sixth ESA signed in 2026, adding to the ~2.5 GW contracted data-center base at steady-state peak.
- Conversion of the Tier 1 expansion bucket (2.0-2.5 GW), which is explicitly excluded from the five-year plan.
- Tier 2 advanced discussions (1-2 GW) converting into signed agreements.
- Constructive outcomes in the Missouri Metro rate case and the Mullin Creek #2 CCN.
- Further upward revision of the $21.6B capital plan, extending the rate base CAGR.
- Regulatory delays or denials in the pending CCN, predetermination, and rate-case proceedings.
- Pipeline conversion slower than expected; management has said it is not going to meet everything in its pipeline.
- Local siting opposition or political resistance to data centers, including the Kansas moratorium campaign issue.
- Cost and financing pressure — higher O&M, depreciation, and interest, the 250 basis-point rate-base-to-earnings lag, and $700-900M a year of equity issuance.
- Supply-chain constraints — long lead-time turbines and T&D equipment, and the sole-source nuclear fuel dependency at Wolf Creek.
Looking Ahead
Over the next twelve months the story turns on conversion. Management is 'highly confident' of at least one more ESA in 2026 and expects to detail it on the Q3 call in November. Two regulatory dockets reach hearings in October — the Missouri Metro rate case and the Mullin Creek #2 CCN. Kansas predetermination and Missouri CCN applications for new generation assets are expected later in 2026.
- Sept 23, 2026Missouri Metro settlement talk — Tests whether the $25M data-center rate credit holds in settlement.
- Oct 5, 2026Missouri Metro rate hearings — Key test of the rate case and the affordability narrative.
- Oct 19, 2026Mullin Creek #2 hearings — Tests approval of the 440 MW gas project for the load build.
- November 2026Q3 call, next ESA — Management expects detail on at least one more signed ESA.
- Late 2026New generation filings — Kansas predetermination and Missouri CCN applications for new gas, solar, and battery assets.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $5.8B | $5.9B | $6.1B | +1.7% |
| Gross Margin | 31.6% | 31.5% | 40.1% | 5bps |
| EBITDA | $2.6B | $2.7B | $2.8B | +3.1% |
| EBITDA Margin | 44.9% | 45.5% | 45.7% | +62bps |
| Net Income | $874M | $856M | $926M | -2.0% |
| Free Cash Flow | −$353M | −$752M | −$1.4B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)40.1%
- EBITDA Margin (TTM)45.7%
- Net Margin (TTM)15.3%
- ROIC4.6%
- FCF Conversion-50.7%
- SBC / Revenue0.3%
The Company
Evergy is a public utility holding company whose subsidiaries are integrated, regulated electric utilities that deliver electricity in Kansas and Missouri. It serves roughly 1.7 million customers and sells electricity only — there is no product diversification beyond regulated service. About one-third of retail revenues are recorded in the third quarter, making Q3 the largest earnings quarter of the year. Its role in the AI buildout sits on the demand side: hyperscale data centers in its territory consume firm power under long-dated Electric Service Agreements, and that load is monetized through the regulated rate base. There is no AI product, no AI software, and no AI-adjacent equipment line.
The company operates through three utility subsidiaries — Evergy Kansas Central, Evergy Metro, and Evergy Missouri West — though the Q1 2026 10-Q reports the business as a single reportable segment. Its generation includes coal units at Jeffrey Energy Center (2,183 MW), La Cygne (1,426 MW), Iatan (1,271 MW), Hawthorn (562 MW), and Lawrence Energy Center (488 MW). It indirectly owns 94% of the Wolf Creek nuclear plant, with Evergy Kansas Central and Evergy Metro each holding 47%. The stated posture is an 'all-of-the-above' generation portfolio, and the 2026 IRP preferred plans through 2032 add more than 5 GW — about 3.9 GW natural gas, 800 MW solar, and 450 MW battery storage — with gas weighted to provide firm power.
Business Segments
Competitive Landscape
Evergy is a regulated monopoly utility in its service territory, so its product — firm regulated power — is not easily replaced for customers inside that territory. Management frames the competitive question as which region and which utility can offer the most attractive large-load tariff and site. It argues the Kansas City metro has a deep concentration of EPC firms and engineering talent, and says the LLPS tariffs in Kansas and Missouri are similar, which reduces regulatory-arbitrage risk between the two states. The source names regional alternatives — Ameren, Black Hills, and OGE Energy — only as inferred competitors; no documented quote shows a customer choosing among them.
- Ameren (AEE)Listed as a Missouri/regional competitor; inferred from the wiring map, not named in company disclosures.
- Black Hills (BKH)Listed as a regional competitor; inferred from the wiring map.
- OGE Energy (OGE)Listed as competing for data-center load in the SPP region; inferred.
Supply Chain
Evergy sits near the end of the power chain. It buys nuclear fuel, gas turbines, coal, and grid equipment, and sells regulated electricity to homes, businesses, and data centers. No neighbor transcript in the source set mentions Evergy by name.
More on EVRG: Earnings recap