Evergy Inc. is planning to execute a share repurchase program in line with the company's strategy to balance its capital structure.
During the company's first-ever earnings call following the completion of the Westar Energy Inc.-Great Plains Energy Inc. merger in June, Evergy executives announced that the board of directors authorized the repurchase of approximately 60 million outstanding shares of Evergy common stock.
No expiration date was set, but the company expects to buy back the shares by mid-2020 using various methods.
"We'll take both a programmatic and opportunistic approach to the repurchases and expect to use a series of transactions over time, including open market repurchases and accelerated share repurchases. This allows for a deliberate and steady pace to rebalance the capital structure," Evergy CFO Anthony Somma said on the call.
Several factors will influence cadence and the number of shares repurchased within each period. The company will disclose the results of the buybacks in its SEC filings.
Somma said the company decided to implement the repurchase program over two years instead of allocating current cash on hand to immediately repurchase the larger portion of shares.
"Our current thinking today is that we would effectuate that through a series of transactions over time to dollar-cost average the share repurchases," he said. "This way, we're deploying our capital efficiently, which many shareholders would like us to do, rather than doing a big squash, big bang and pay $1.10 for something we can buy for $1."
On Aug. 8, Evergy reported second-quarter earnings of $102 million, or 56 cents per share, compared with earnings of $72 million, or 50 cents per share, a year ago. The results include Westar's earnings for the full period and the earnings of former Great Plains utilities Kansas City Power & Light Co. and KCP&L Greater Missouri Operations Co. starting in June.
Evergy's pro forma earnings for the quarter were $244 million, or 90 cents per share, compared with earnings of $161 million, or 59 cents per share, a year ago. Pro forma earnings reflect consolidated operations of Evergy as if the merger had taken place on Jan. 1, 2017, and include nonrecurring merger-related costs.
The executives said Evergy is on track to reach its EPS growth target of 6% to 8% through 2021. The company is targeting a dividend payout ratio of 60% to 70% over time.