Black Hills (BKH) 2 Nov 232023 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Q3 2023 Black Hills Corporation Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jerome Nichols, Director of Investor Relations.

Thank you, and good morning, everyone. Corporation's XXXX Hills Conference Black to Third Earnings Quarter Call. Welcome

Also heading. Vice and Vice find www.blackhillscorp.com this Relations and Officer; Chief President and Jacobs, Senior Officer. of Growth Senior earnings our President morning and can are and Lind materials today under Chief our are Vice discussion Utilities; earnings Investor Executive this at President You and Marne website release for Evans, quarterly our call the President, Strategy. Leading Nooney, Financial Kimberly attending Jones, Senior Todd on

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factors for results expectations. XX-K filed our XX-Q with of that the now turn of cause to the will I on to direct website earnings X Slide believe could differ list and Form reasonable release, recent Evans. you of presentation to over some we SEC the Lind differ materially Form our on We that future a from most call the may results expectations and investor our materially. Although actual our assumptions, based our are

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to addition quarter additional in of on efforts we earnings the growth our objectives plan, solid line delivering expectations, execution our excellence, strategy and plan expenses. In our delivered with continuing advancing guidance through our operational our control continued are with strengthen to X focused initiatives. year, to sheet We the and for key regulatory and regulatory earnings team's balance for coupled

guidance top normal assuming at guidance We our expect conditions, fourth range end as deliver assumptions. operating outlined to for our in quarter the earnings this and weather of year,

delivered financial credit ITM flows, refinancing also We strengthen debt and further our through on under our our metrics improve plan balance operating sheet maturity cash successfully to issuing our stock and program. November strong

constructive review negotiated the gas. On settlement a for we rate front, recently Wyoming

by the increase July, optimistic for megawatts. month. of peak recently customer. data Arkansas loads a Colorado toward that most and the about the Cheyenne peak center driven customer We our the for plan Wyoming resolution These consecutive objective in peaks of Cheyenne XXX attracting preparing a application business last decade representing expand expanding next gas a to industries growth in part remain these file and also a working are new to our are large area. strategic new by in blockchain region for of we're over we system, We XXth we an year nearly In year-end Electric to remarkable gas, XX% an served of

milestones our our outlook. and in have results into reliability of our our for of recently We of growing many our updated energy financial of renewable operational to the and this remainder to managed achieve these recently the needs We XXX place color work provide customers' portfolio we a generation serve strategic strategies to our add comments. key to add to guidance. continue XXX-year resources. our X advance to new and earnings as our appreciate as very resource throughout on the megawatts annual are some our our end plan details regarding renewable we more will of out wildfire mitigation, stakeholders' We her and review seriously we to topic will interest of in share solid we and his the programs provided date which history. looks resiliency my Marne support measures how Todd strategy, in positive our guiding systems. wrap part our take review, up strategic top quarterly during objectives comments. have Slide the industry-leading With transparency outlook and XXXX our our we year, And and

earnings long-term serves which Our growth deploy a around guidance our X% and target, strengthens and We're opportunities in of ongoing customers based off per and execution midpoint. balance continuing our supports to that X% is way prudent clarity our XXXX capital share to strategic growth sheet.

capital Our we $X.X announced which year last totaled billion. plan, current X-year

reminder, X-year investments RFPs or in our include not Colorado a from South plan As new does stemming yet our Dakota.

during provide call. additional will we earnings quarter, last stated QX and insights you our we As updated

will that, pipeline guidance, forecast our XXXX With XXXX Our review. and updated an financial dividend opportunities. of Kimberly? for customer-focused some growth Kimberly of capital include will provide our earnings will investment our our updates include that through XXXX plans growing

morning, last and Slide my you, same everyone. X on Thank I'll with comments compared share good earnings per period begin the Lind, year. to

management XXXX the financial strong compared were driven delivered $X.XX and rider year results in compared QX Wygen at EPS driven to were income QX $X.XX when $X.XX I. Quarterly expense investment and we year. natural XXXX interest and third our higher-than-planned rates primarily lost EPS X the net and by rates change prior QX generation quarter by $X.XX rider of of in of electric for recovery, and and new partially results. earlier, Improvement Slide outage of recovery was new solid These utility noted weather performance after-tax negative last to with primarily recaptured comparing of gas $X.XX net XXXX. drivers offset margins revenue from for current income. Lind As highlights by from

partially I $X.XX Our X.X% expense income same to change by lower our Erie a in compared in to expense offset and sale of recovery natural At primarily management storm from Gas $X.XX and of margins from last year-over-year; net $X.XX results. in of contracts labor impact X than higher recovery interest due valuation impacts related Electric customer commodity expenses items: year compared by last driven benefited represents onetime primarily $X.XX of year new weather a and the O&M mark-to-market a to year-over-year year, driven period to balance the and $X.XX inflationary increased on $X.XX impacts net rider O&M services offset rider gas the benefit a Slide the of This offset winter energy year. a margin sales. new we cash of and last land higher expense QX the residential of and Utilities, expenses were partially were higher the further Utilities, from as rates issuances, Interest income strategic year-to-date a for These quarter, gains strategic sale as earlier. rates sale to and costs. At new increased wind X mentioned offset during growth assets the from were impact low by our available support debt land of due by partially slightly was cash. interest Cheyenne interest usage. by to off-system on service area. quarter was last up to transmission Interest operating outside and $X.XX and margin in growth interest per our share and from on rates our rates.

to We controllable continue have expenses. operating manage been and will our

end deliver earlier, As guidance the are Lind of and at to expect XXXX our the noted range. earnings results we top reaffirming

financial details in our earnings available yesterday. results regarding release our XX-Q released and Additional are

to X. Moving Slide

strong One from our credit balance is disciplined year flows with Since objectives this we investment. and strategic and have financial plans, last sheet. our year, cash of improved key of significantly strengthen operations to execution our operating metrics for capital our

reduced XXXX. of at XX.X% from to have We points XXX to XX.X% basis XX, XXXX as by net debt total our September capitalization year-end

We continue all X at debt FFO our rating metrics agencies. to to improve

We approximately $XXX to year. for plan capital managing the million our are

recall, cash resources may additional which Iowa noncore the our for sold we farm You wind of year. provided first quarter, assets the the remainder in

September, new we of at Our will for issued in with financing all In November. notes million plan the commercial with available with of million year repay $XXX notes we our in $XXX issuing in used the our balances. cash, of paper repay $XXX maturing to combination end and debt proceeds million began March

sheet date credit lens to our financial commitment $XXX $XXX the throughout the detailed balance of we to liquidity. equity new quality, and display our range $XXX We year. work ATM year compared planned million delivering issued through for charts benefit under of XX, our have Comstock on million program. our the X to our credit structure position on on the issued We've are reflected is strengthen Slide in Slide capital of our shares million and metrics. to improve which Overall, The our of

the long-term out debt facility. net to million our for increasing continue of $XXX growing this revolving completed A repayment no sheet month. quarter borrowings was and end, track our on displays and to discussed, of of balance had our dependable million nearly is focused with you later nearly previously metrics. record. liquidity our when million our shareholders. cash $XXX Total the or million dividend industry-leading As a Slide $X.X component billion for be credit $XXX remain improving strategy on value we XX dividend credit At we short-term quality $XXX

EPS to increases with continue X% in expect of record of growth line dividend our rate track our XX-year X%. annual to long-term We

of on rate share. our is based guidance earnings the growth per $X.XX of midpoint Our

XX%. We a to for turn call to now continue our update. I business over of XX% Marne will will payout target to the ratio

your I'd top or team a our congratulations electric investments, day. Dakota resources XXXX is generation our once Dakota XXX megawatts quarter. and quartile in customers renewable Kimberly. rank efforts Electric. reliable planning plan Colorado to us reliability outage to XXXX earlier long-term execution ongoing by minutes start combined XXX responsiveness achievement systems, and XXXX and Electric our prudency of decade Wyoming even reliability loads renewable industry-leading of one This reflected every for CDI. and maintaining We reflects megawatts build This a like South you, was our system. the and our Thank quarter team an of long-standing South recognizing progress Electric. of that of DEI lays strategic system. more we new based for safe, for in in initiatives a you, of the during to considering XX of out this recognized for plans, Slide resilient as solid again Thank key our as the on increases a consecutive completed annual megawatts resource peak for add to and of our electric Colorado resources transfer for XXX for quarter, team by

Dakota, negotiations. received South our evaluated are request currently For and proposals we in response bids to the for in

expect Dakota South Service Commission RFP the in of response of supporting we share of project Public XXXX. project XXXX. a the our first diverse of Public the to Wyoming to public is convenience the energy clean and received In certificate also filed with plan. quarter part Colorado, to necessity strong with proposal Utility and as QX Commission The We be the a in targeted

part to evaluating summary process. of as this We big a year Utility and are bids will Commission approval the the provide Colorado Public currently

to when and will February. likely South early plan investment to more with Electric the And of our capital an also provide we certainty. will estimate for able Dakota capital We in refresh capital have be details update those we the forecast

for XX. be transmission Ready excited Slide to our Wyoming to underway. Moving I'm project electric

This targeted and better to provide our and enhance will to working our mile a near system, Slide and is reliability through stabilization We completed are essentially for the serve is wildfire customers will Wyoming serve Wyoming The and our mitigation to ability be and Electric our long-term interconnected XXX assets capacity customers. closing energized and transmission utility XXXX. transmission project to now enhance access multiple expected hand will be Ready transmission efforts. by of a way us. will energy constructed rights are substation owned Shaan weeks. the costs resiliency, of is through year-end growing Dakota customer with base. our our reliably our South transmission rider. through by on our and The larger, start more The land in expansion planning Safety priorities recovery project Increased of loop for expansion Wyoming-based be to investment our XX outlines our Wyoming and top go between Electric phases markets increase systems. expected

variety wide initiatives focus. is embedded we manage perspective, practices and And we and For X-layered combination of support an have our wildfire Broadly, From decades, through we surrounding delivery drag a energy our wildfire the to programs of programs, while operations reliability. protect response. a mitigation daily approach, and asset efforts integrity measures safeguarding use facilities systems mitigation and programs environment. risk our wildfire safety a tools, to a and operational risk

focus on programs as and integrity asset inspections. and Our measures the safety preventative such management

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includes of systems our conditions, operational assessment Our as work. day-to-day and of response construction such management activities

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Marn. Thanks,

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forecast profitable ways. variety of incremental projects, capital growth major other in pursuing this and aggressively we Beyond are a

is areas: of initiatives strategic streams opportunities driving Our into creative and an centers, lays is transmission and example transmission focused customer-focused Wyoming new and our living choice. in vision blockchain, project. project innovative renewable out gas solutions natural XX through of a to effectiveness margin drive team An on be cultivating other infrastructure storage, our that partner energy organizational X efficiency. expansion our ready data and Slide

access As of we expect and renewable and larger needs. to customers' of more the energy future a generation longer-term our to part through project market unlock a serve host to energy opportunities expanded vision,

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are initiatives, aggressively in to continuing We strategy and macroeconomic pipeline near-term the opportunity we improve successfully our how better our clarity around evolving can developing our realizing growth execute environment.

We well plan as that through deliver strong for current sustained results through we confident Lind? long-term will stakeholders. our as value our are

financial and Thank and third Todd. we on you, operational meaningful delivered our initiatives. strategic summary, in the progress performance In quarter strong made

We achieve of are positioned earnings our further strengthen to year well balance end and guidance sheet. to for our the the top

managing We will serve deploying in to and customers. remain disciplined expenses capital

we execute to and to long-term excited target. regulatory support about continues X% questions. team our happy are growth Our confidence initiatives, in we're plan, to that, our X% growth entertain With which our

[Operator Instructions].

America. from Bank Julien Our Dumoulin-Smith question first of comes with

here. about to I exhaustive guys to morning. you updates the you Pretty all clearly. sure set. again. just But Thank want if Look, talking we And make understand we outlook thank pivot can can, for we 'XX this the

reflected from O&M contemplated you your of that a out be 'XX, 'XX, sounds bit in Obviously, to confidence that that It that that in 'XX a level and here levers enabling there, into the considering onetime-ish particular what right, in are the growth, off Can XX you into talk type originally to gives seem have specifically? visibility? incremental hear interest about you notable. here like, into little to is off stand you that headwinds X% that just there's more to but the you been especially if bit items expense? pieces seems about in talk grow Can and X% 'XX we now I guidance reaffirming announced more guys able little So the it beyond. midpoint some are of

for This thanks 'XX. Julien, question. about Lind. less the X We're is now from than months

and we considered so debt 'XX. replaced in the question in but obviously, our proud hard, especially, he we've dive think equity we that model, doing working really that We've well. our on momentum I'm question, and leaning I'm taking for can that XXXX. turn moment, our and thank your you turn So into team which can we you, detail. the as been watching that this based for well over how in considered costs, over that of for 'XX, for more to that Again, on we're into into midpoint are details doing take before. 'XX, it we've you we're the I'll in, momentum we Kimberly XXXX also pointing indicated a working off have going issuance to as building out guidance, 'XX to of controlling into XXXX. our In Kimberly But

When we rate guidance macroeconomic of our into you Yes. took X%. thank the lot guidance much. XXXX, a also only designed not so but X% this we consideration for of earlier we how at year, challenges as to reestablished growth our looked the we earnings Julien, environment earnings

your around for those inflation, about we higher in potential questions can think included the higher interest costs, those you So plan. and evaluated

onetime items in that you and commented items. were think range. we included talked our about on Those guidance contemplated today I

makes to us we growth lot confident around on discussed that of our And are picture, that so holistic Todd X% a updates Marne to of think here going capital when you be you I opportunities what that's X% with at in QX. and providing growth more look the top the

continued emphasize also very just beneficial seeing loan we're Yes. from the been Well us. said. for customers growth And I

Absolutely. Yes.

it bit comment to those further. to same You kind these guys bigger like lean eligibility things that a as you time a of late. for something bit you really could a right last What's especially of in quarter, if if don't how going a what ownership have be of to quantities you the mind, or but take projects from And can in I own throw extent a fourth be fourth include obviously regulatory on that different, perhaps resources? seems. through you PSCo the Or guys perspective which a I then fact, about space bit, having fourth let's "ready"? the here, quarter you the visibility long-term above talk of talk do in number a to so can mean, just on think renewable have I of you terms your initiatives, unveil 'XX to permitting at about of on than quarter. In little into update seems to been will those? that on peer, just know working little to saw if disproportionate proposed historical that's of norms in well the Colorado renewable here lot the

If could that elaborate too. front, on you

kinds This exercised comments best. expansions. center the We've Yes. option serving. do Lind blockchain We're speaking seeing and our of those my we're continues. is mining there, I'll with very expand territories. huge that customers are data but been Starting are mine that us. about one, impact growing 'XX, mentioned for in their in that. into now the migration the seeing point again. Not a we We've load our to Lots organization opening things They've strong, seeing nice immigration customers unpack Julien. to is still of of growth, our

I design In both the at build asked South transfer and them. you Clean our build, Plan those so are of IRP, Dakota, least mentioned mentioned what currently for and contracts think negotiating that's we You a with Energy bidders. we

term. think they So ownership those about long We advantage that of understand commissioners South our visited the we Dakota PPAs. believe in assets owning we'll with be We've versus well. the

With what's watching ahead the we're with at least happening us Plan, Excel closely. months. about Clean They X Energy of our are counterpart

closely. that watching we're So

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reports refiling the bids. I to So strong We'll have that, we're Marne. add something And our bids we very have if evaluating of be to for with relatively to Marne currently soon that might lots see commission. that, to look you

comments Just that, a Julien. couple additional on of

that that for Dakota service we South have in in to So planning in build mid-XXXX. are transfer,

So reduction frame between energy in Colorado will by just XX% you and some to XXXX. to requirements the That XXXX that. give on then of clean drive service us for those will And resources, time plan meet be XXXX. the our

too, I asset. other to up mention Wyoming want our The Ready follow on just is asset do

is year-end that permitting expected way. service rights land asset That and is by progress So to currently in underway in is a XXXX. of from be

Got you. And last here. little twist Excellent. then

increasing of obviously, chunk expected the think number further 'XX remainder how got you've done On other and/or needs given size of that But about already the equity, are here. pursue projects good think a of resolving you a or ACM Do here, the still, avenues? 'XX? do or to in created you continue leverage ATM

include could It year's this sheet. clear, equity strengthening It trade opportunities. focused want all specifically include at our look I could be obviously on block ATM. just opportunities. we Julien, to our balance Yes, was

about you on As maintaining opportunities it's and heard Marne credit move Lind lot forward, forward, about focused quality. obviously, we think as our we going capital a growth capital BBB+ talk

is future we to But capital what perspective. do timing at equity it future going expect and opportunities those depend from to So really that on growth a look opportunities investment point. finance in at the our

All the best.

And [Operator Willard question next Mizuho. Grainger our comes with from Instructions].

rate the review looking thinking besides at we Gas? on Are cases should touch about for there to wanted any be that Arkansas progress. just you're rate I XXXX that other

this It's review. disclosing at we are under publicly currently that They're nothing point.

in 'XX cases we the Wyoming, recap Colorado, filing right have to Arkansas. are just now, So in that progress and in we've indicated

we specifically X year about a jurisdictions. We but haven't identified to expect file

to like this time Lind. helps. can always We always Will, to let Having know first, is of what regulators they we what typically ahead discussions like those do, to talk our anticipate. them

to comments, opening in that. we what nicely will X reviews Todd rate So about going expect in year his response we be answer the But did doing question as forward? a

That's helpful. contemplated X% to X% in CAGR? be would that And that

Yes.

now remarks. any Lind over back Thank I'd Evans like the turn for closing call to you. to

you. Corporation, winter in low Hills see and We're Hills gas of EEI our service enter seeing Well, have of what season, costs forward Conference. thank peak territories, And Black many for glad quarter safe couple Energy. we're already look year-to-date. relatively into at weeks heating Energy to we pass you and please you those this our interest some happy of experiencing prices Black for lower natural customers team a encourage our that our performed that we here to in And the Very proud all day. Thank your we of Black you and I the we're in customers. to on Hills as Financial

Thank conference you participating. you. concludes call. Thank This for today's

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