Evergy (EVRG) Q3 2025: Cost Control Drives Profit on Flat Revenue

Evergy, Inc. (EVRG), a key player in providing electricity to communities across Kansas and Missouri, recently released its financial results for the third quarter of 2025. In this post, we'll delve into the numbers from their latest 10-Q filing to understand the company's performance and what it signals for its path forward.

A Tale of Steady Profits on Flat Revenue

At first glance, Evergy's third quarter appears remarkably stable. The company reported operating revenues of $1.81 billion, almost identical to the same period last year. However, the story gets interesting when we look at the bottom line. Net income attributable to Evergy rose to $475.0 million ($2.03 per share), up slightly from $465.6 million ($2.02 per share) in Q3 2024.

How did they achieve higher profits on virtually the same revenue? The answer lies in effective cost management.

The following flow diagram provides a visual breakdown of Evergy's revenues and expenses for the third quarter, illustrating how revenue is transformed into profit.

A key factor in this quarter's performance was a significant reduction in Fuel and purchased power costs, which fell by over $40 million to $393.1 million. This decrease was the primary driver that pushed operating income up to $658.5 million from $627.5 million a year ago, more than offsetting increases in other areas like depreciation.

The Year-to-Date Perspective

While the third quarter showed positive momentum, the picture for the first nine months of 2025 is more nuanced. For the year-to-date period, Evergy's net income actually dipped to $771.3 million, down from $795.3 million in the same period of 2024.

Several factors contributed to this year-to-date decline:

• Higher Interest Expense: Interest costs rose by $37.6 million to $458.3 million, largely due to new long-term debt issuances to fund the company's operations and investments.
• Investment Losses: A significant swing came from "Other Income (Expense)," which went from an $8.3 million gain last year to a $14.8 million loss this year. The company attributes this primarily to $29.0 million in unrealized and impairment losses from its non-regulated investments in early-stage clean energy companies.
• Increased Operating Costs: Year-to-date operating and maintenance expenses also ticked up by $19.1 million, driven by higher labor, employee benefits, and credit loss expenses.

Navigating the Regulatory and Environmental Maze

As a regulated utility, Evergy's financial health is intrinsically linked to the decisions of state and federal regulators. The filing highlights several key ongoing proceedings, including a 2025 rate case for its Evergy Kansas Central subsidiary. The outcome of these cases will directly impact future revenues. On a positive note, new retail rates for its Evergy Missouri West division, which took effect in January 2025, provided an $82.7 million boost to year-to-date gross margin.

Looking ahead, Evergy is also making substantial capital investments to modernize its infrastructure. This includes plans for a new 440-megawatt natural gas plant in Missouri, slated for operation in 2030, alongside ongoing investments in renewable energy. These projects are essential for meeting future energy demands but also require careful financial planning and regulatory approval.

Evergy's Q3 performance showcases its ability to manage costs effectively, particularly in the volatile fuel market. However, the year-to-date results highlight the pressures from rising interest rates and the risks associated with non-core investments. The company's path forward will be shaped by its ability to secure favorable outcomes in its rate cases while executing on its long-term capital projects in a complex environmental and regulatory landscape.