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United States securities and exchange commission logo
May 3, 2024
Kirkland Andrews
Chief Financial Officer
Evergy, Inc.
1200 Main Street
Kansas City, MO 64105
Re: Evergy, Inc.
Form 10-K for the
Fiscal Year ended December 31, 2023
Filed February 29,
2024
File No. 001-38515
Dear Kirkland Andrews:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments.
Please respond to this letter within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe a
comment applies to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to this letter, we may have additional comments.
Form 10-K for the Fiscal Year ended December 31, 2023
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Adjusted Earnings (non-GAAP) and Adjusted EPS (non-GAAP), page 38
1. We understand from your
disclosure in Note 4 on page 104 that in connection with
settling various issues
with the Kansas Corporation Commission during 2023, you agreed
to return $96.5 million
to customers of Evergy Kansas Central over a three year
period, and that you
accounted for the matter by recognizing a regulatory liability and a
reduction in revenues
in corresponding amounts. In Note 2 on page 99, you refer to a
similar accounting
event in 2022 regarding Sibley Station, involving a rate case amended
final order to return
$68.0 million to customers of Evergy Missouri West over a four-year
period, although
disclosures on pages 108 and 110 indicate the regulatory liability
was $108.0 million,
while disclosure on page 40 indicates it was $51.4 million.
We note that your
reconciliation shows that in compiling your non-GAAP Adjusted
Earnings measure you
have adjustments pertaining to each of these matters, including an
Kirkland Andrews
Evergy, Inc.
May 3, 2024
Page 2
add-back of $96.5 million to net income for 2023, and an add-back of
$51.4 million to net
income in 2022, both of which appear to effectively reverse the
accounting that was
required and applied under generally accepted accounting principles.
You explain that you believe the resulting measure provides a meaningful
basis for
evaluating operations because it excludes items that you do not believe
are indicative of
your ongoing performance, or that have created earnings volatility.
However, you do not
explain how excluding the adverse effects of these economic accounting
events in
compiling your non-GAAP performance measure would yield a measure that
could be
fairly characterized as providing a meaningful basis for evaluating
operations.
As the funds will be returned to customers over several future periods,
it is also unclear
how you would fairly characterize recognition of the adverse effects as
not indicative of
your ongoing performance, or how you would otherwise advise investors of
the adverse
effects in such future periods. For example, we note that you have not
included an
adjustment in compiling the 2023 non-GAAP measure for any portion of the
reduction to
the regulatory liability pertaining to Sibley Station. We also note that
you have not
provided commentary regarding earlier disclosures of the non-GAAP
measures that
reflected the favorable effects of the revenues that have now been
reversed.
Given that these adjustments appear to effectively change the recognition
and
measurement principles that are required to be applied under generally
accepted
accounting principles, unless you are able to show how these would not be
contrary to the
guidance in the answer to Question 100.04 of our Compliance & Disclosure
Interpretations regarding non-GAAP measures, it appears that you would
need to amend
your filing to revise your computations of the non-GAAP measures. You may
view
this guidance at:
https://www.sec.gov/corpfin/non-gaap-financial-measures.htm.
Please also revise your disclosures on pages 38, 47, and 58 that
characterize recognition of
the $96.5 million regulatory liability as a "deferral of revenues" to
utilize terminology or
descriptions that are representationally faithful of this accounting
event.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff. Please contact Jenifer Gallagher at
202-551-3706 or Yong Kim at
202-551-3323 with any questions.
Sincerely,
FirstName LastNameKirkland Andrews
Division of
Corporation Finance
Comapany NameEvergy, Inc.
Office of Energy &
Transportation
May 3, 2024 Page 2
cc: Steve Busser
FirstName LastName