Attached files
| file | filename |
|---|---|
| EX-99.4 - EXHIBIT 99.4 - WESTAR ENERGY INC /KS | a20171031ex994.htm |
| EX-99.2 - EXHIBIT 99.2 - WESTAR ENERGY INC /KS | wr-09302017x8xkexhibit992.htm |
| EX-99.1 - EXHIBIT 99.1 - WESTAR ENERGY INC /KS | wr-09302017x8xkexhibit991.htm |
| 8-K - 8-K - WESTAR ENERGY INC /KS | wr-09302017xearningsreleas.htm |
Westar Energy
Investor Update – October 31, 2017
Exhibit 99.3
Forward-Looking Disclosures
OCTOBER 31, 2017 INVESTOR UPDATE 2
Forward Looking Statements
Certain matters discussed in this presentation are “forward-looking statements.” The Private Securities Litigation Reform Act of 1995 has
established that these statements qualify for safe harbors from liability. Forward-looking statements may include words like “believe,”
“anticipate,” “target,” “expect,” “pro forma,” “estimate,” “intend,” “guidance” or words of similar meaning. Forward-looking statements describe
future plans, objectives, expectations or goals. Although Westar Energy believes that its expectations are based on reasonable assumptions, all
forward-looking statements involve risk and uncertainty. The factors that could cause actual results to differ materially from these forward-looking
statements include those discussed herein as well as (1) those discussed in the company’s Annual Report on Form 10-K for the year ended Dec.
31, 2016 (a) under the heading, “Forward-Looking Statements,” (b) in ITEM 1. Business, (c) in ITEM 1A. Risk Factors, (d) in ITEM 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, and (e) in ITEM 8. Financial Statements and
Supplementary Data: Notes 3, 14 and 16; (2) those discussed in the company’s Quarterly Reports on Form 10-Q filed on May 9, 2017, Aug. 8,
2017 and Oct. 31, 2017, (a) under the heading “Forward-Looking Statements,” (b) in ITEM 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations, (c) in Part I, Financial Information, ITEM 1. Financial Statements: Notes 3, 11, 12 (in the Form
10-Q filed on May 9, 2017), and 13 (in the Form 10-Q filed on Aug. 8, 2017 and Oct. 31, 2017), and (d) ITEM 1A. Risk Factors; and (3) other
factors discussed in the company’s filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the
date such statement was made, and the company does not undertake any obligation to update any forward-looking statement to reflect events or
circumstances after the date on which such statement was made.
Additional Information
The information in this investor update is not complete, and is intended to be read in conjunction with Westar Energy, Inc.’s full earnings package
for the quarter ended September 30, 2017 as well as other information regarding the company that is filed with the Securities and Exchange
Commission. The full earnings package is available is available under Supplemental Materials within the investor section of the company website
at www.WestarEnergy.com, and the company’s filings with the Securities and Exchange Commission can be found in the same section under SEC
Filings.
Company Update
3 OCTOBER 31, 2017 INVESTOR UPDATE
Recent Announcements & Focus
Reported Q3 2017 EPS of $1.11
Compared to Q3 2016 EPS of $1.09
Upcoming Rate Review
Expect to file for general rate review in 1st quarter 2018
Merger with Great Plains Energy
100% stock-for-stock, tax-free exchange
Westar: exchange 1 WR share for 1 share of new company stock
Great Plains: exchange 1 GXP share for .5981 shares of new company stock
Targeted EPS CAGR at 6-8% (off WR’s ’16 EPS of $2.43)
Immediate 15% WR dividend boost at closing
Adjustment maintains GXP dividend
Targeted dividend CAGR at 6-8% thereafter
Improved credit profile; strong investment grade credit
Continued focus on clean, affordable, reliable and safe power
4 OCTOBER 31, 2017 INVESTOR UPDATE
Clean Energy Leader
5 OCTOBER 31, 2017 INVESTOR UPDATE
In 2017, more than half of retail sales
will come from emission-free sources –
renewables and nuclear power.
* Emissions and water reduction change since 2005
Earnings Update
6 OCTOBER 31, 2017 INVESTOR UPDATE
Year Over Year Earnings Variance
$1.09 $1.11
$2.06 $2.03
3Q16 3Q17 YTD 16 YTD 17
EPS
2016 vs 2017
7
Q3 Variance Drivers
Lower income tax expense ~ $25M
Lower O&M~ $7M
11% decrease in CDD
Higher depreciation expense ~ ($10M)
Decrease in COLI benefit ~ ($10M)
Increase in merger-related expenses ~ ($6M)
YTD Variance Drivers
12% decrease in CDD
Higher depreciation expense ~ ($24M)
Lower COLI benefit ~ ($17M)
Higher interest expense ~ ($7M)
Lower income tax expense ~ $48M
Lower property tax amortization expense ~ $19M
Lower O&M/SG&A ~ $12M
Full Earnings Package is available under Supplemental
Materials within the investor section of the company
website at www.WestarEnergy.com.
OCTOBER 31, 2017 INVESTOR UPDATE
Additional Earnings Detail
Merger Expenses
2016 – $10.2M
Q3 2017 – $7.8M
YTD 2017 – $8.6M
Expected total upon closing – $40M to 45M
Weather EPS Estimate
Q3 – $0.05 unfavorable to 2016 – $0.03 unfavorable to normal
2017 – $0.09 unfavorable to 2016 – $0.09 unfavorable to normal
COLI
Actual:
Q3 – $0M
2017 – $0M
2017 annual assumption – $20M
Transmission Margin Increase
2017 annual assumption – $18M
8 OCTOBER 31, 2017 INVESTOR UPDATE
Merger Update
9 OCTOBER 31, 2017 INVESTOR UPDATE
Merger Value
10 OCTOBER 31, 2017 INVESTOR UPDATE
Expected stronger EPS growth
New company EPS CAGR of 6-8%1 vs
WR stand-alone EPS CAGR of 4-6%2
Merger savings – Improve “slope” of EPS growth
Share buybacks – Upward “shift” of EPS growth
Immediate ≈15% dividend increase
Not at expense of credit or payout ratio
Tax-free exchange
Structured to address regulatory order
Not as dependent on future ongoing
rate relief
2016 2022e
Westar Stand Alone Plan, Guidance 4%-6%, Middle of Range
Merger, Opportunities for Additional Synergies/Buy-back Shares
Merger, Modest Synergies
Merger, No Synergies, Excess Cash Used to Buy-back Approximately 30 Million
Shares
EPS Growth Targets
6%
7%
8%
Merger Close
2018e
1New company expected EPS CAGR based off ‘16 WR EPS of $2.43/sh.
2 WR stand-alone expected EPS CAGR based off normalized ‘15 WR EPS of $2.21/sh.
Strong Growth Targets
11 OCTOBER 31, 2017 INVESTOR UPDATE
$2.19
$1.44
$1.52
$1.60
$1.84
$2.32
2015A 2016A 2017 Pro Forma
2018E
Pro Forma
2021E
$2.43
$3.57
2016A Pro Forma 2021E
$3.25
Targeted EPS Growth 6-8%1 Targeted Dividend Growth 6-8%1
1Indicated annual earnings per share and dividend per share are historical Westar Energy and targeted combined company.
Merger Expected To Close In 1st Half 2018
12 OCTOBER 31, 2017 INVESTOR UPDATE
STAKEHOLDER FILED
APPROVAL
ANTICIPATED ADDITIONAL INFO.
GXP and WR shareholders √ 4Q17
Special shareholder meetings for Westar and
Great Plains to be held on November 21, 2017
KCC √ 2Q18 Docket: 18-KCPE-095-MER
MPSC √ 2Q18 Docket: EM-208-0012
FERC √ 1Q18 – 2Q18 Docket: EC-171-000
NRC √ 1Q18 – 2Q18 Docket: 50-482
U.S. DOJ/FTC (HSR) 4Q17 4Q17 – 1Q18
FCC 1Q18 – 2Q18 1Q18 – 2Q18
Merger Summary
13 OCTOBER 31, 2017 INVESTOR UPDATE
Transaction
Structure
• All stock merger of equals (100% stock-for-stock, tax-free exchange); combined equity value of
~$14 billion
• New company to be jointly named prior to close
Exchange Ratio
• Westar Energy: 1:1
• Great Plains Energy: 0.5981:1
Approximate Pro
Forma Ownership
• Westar Energy 52.5%
• Great Plains Energy 47.5%
Pro Forma Dividend
• Results in 15% dividend uplift for Westar Energy
• Adjust to maintain current Great Plains Energy dividend
Termination Fee
• Reverse break-up fee of $190 million in favor of Westar Energy
• Mutual fiduciary out break-up fees of $190 million in favor of the other
• Great Plains Energy no-vote fee of $80 million in favor of Westar Energy
Governance
• Mark Ruelle, Westar Energy CEO to become non-executive chairman
• Terry Bassham, Great Plains Energy President & CEO to remain President & CEO
• Tony Somma (Westar Energy CFO) to be CFO; Kevin Bryant (Great Plains Energy CFO) to be COO
• Equal board representation from each company, including Bassham and Ruelle
Headquarters
• Corporate Headquarters – Kansas City, Missouri
• Operating Headquarters – Topeka, Kansas; Kansas City, Missouri
Timing / Approvals
• Expected to close first half 2018
• Shareholders, federal and state regulators
Additional Information
OCTOBER 31, 2017 INVESTOR UPDATE 14
Additional Information and Where to Find It
This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any proxy, vote or approval,
nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. In connection with the proposed transactions, Monarch Energy has filed with the SEC a Registration
Statement on Form S-4 (Registration No. 333-220465), which was declared effective by the SEC, Great Plains Energy and Westar Energy have each
filed a definitive joint proxy statement, which also constitutes a prospectus of Monarch Energy, each of which is publicly available, and Great Plains
Energy, Westar Energy and Monarch Energy have filed and may file other documents regarding the proposed transactions with the SEC. Great Plains
Energy and Westar Energy mailed the definitive joint proxy statement/prospectus in connection with the transactions to their respective shareholders on
or around October 13, 2017. WE URGE INVESTORS TO READ THE REGISTRATION STATEMENT AND DEFINITIVE JOINT PROXY
STATEMENT/PROSPECTUS AND THESE OTHER MATERIALS CAREFULLY BECAUSE THEY CONTAIN IMPORTANT INFORMATION
ABOUT GREAT PLAINS ENERGY, WESTAR ENERGY, MONARCH ENERGY AND THE PROPOSED TRANSACTIONS.
Investors can obtain free copies of the Registration Statement and definitive joint proxy statement/prospectus and other documents filed by Monarch
Energy, Great Plains Energy and Westar Energy with the SEC at http://www.sec.gov, the SEC’s website. These documents filed by Great Plains Energy
and Monarch Energy are also available free of charge from Great Plains Energy’s website (http://www.greatplainsenergy.com) under the tab, “Investor
Relations” and then under the heading “SEC Filings,” or by contacting Great Plains Energy’s Investor Relations Department at 1-800-245-5275. These
documents filed by Westar Energy are also available free of charge from Westar Energy’s website (http://www.westarenergy.com) under the tab
“Investors” and then under the heading “SEC Filings,” or by contacting Westar Energy’s Investor Relations Department at 785-575-8227.
Participants in Proxy Solicitation
Great Plains Energy, Westar Energy and their respective directors and certain of their executive officers and employees may be deemed, under SEC
rules, to be participants in the solicitation of proxies from Great Plains Energy’s and Westar Energy’s shareholders with respect to the proposed
transactions. Information regarding the officers and directors of Great Plains Energy is included in its definitive proxy statement for its 2017 annual
meeting filed with the SEC on March 23, 2017. Information regarding the officers and directors of Westar Energy is included in its definitive proxy
statement for its 2017 annual meeting filed with the SEC on September 14, 2017. Additional information regarding the identity of potential participants,
and their direct or indirect interests, by securities, holdings or otherwise, is set forth in the Registration Statement and definitive joint proxy
statement/prospectus and other materials filed with SEC in connection with the proposed merger. Free copies of these documents may be obtained as
described in the paragraphs above.