Black Hills (BKH) 7 Nov 242024 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Q3 2024 Black Hills Corporation Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. Instructions]. [Operator like Diaz, conference Director now speaker to hand Sal today, of to would over the your I Investor Relations.

morning, Earnings Good Third you. and Black to Thank Hills Quarter XXXX Conference Call. welcome Corporation's

morning, our earnings under materials call at You can on Relations release website heading. find our Investor for and our this the www.blackhillscorp.com

attending XX we Institute's Financial Electric today, begin note through we Edison XX. like to that on the November Black Before would Hills November will be Conference

at be Utilities. website and meeting today and with and event. Leading Our the leadership Senior Jones, analysts be our conference Evans, Chief Vice investor and on our team Nooney, Officer; Kimberly prior Marne Senior Vice will presentation President will Officer; are Linn discussion the and investors President Financial the President, Executive quarterly posted earnings to Chief

During of today, discussion as are by the contain we and inherent and may uncertainties a in defined make there our earnings Commission comments. Exchange Securities number forward-looking statements comments such

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

financial Kimberly with We on advancement of strategic thank performance a X. our update, Slide overview our provide today. begin which with I'll Good in customer-focused our new our our provide strategy, brief Marne the Thank and I'm operational us progress. Starting detail will and quarter. my projects. growth the morning, you all and and you, reflected is joining for more on progress margins Sal. of on comments will our team's pleased

on execute continue our and service our we initiatives. advanced to delivered to As our regulatory excellent a and financial team, customers, growth targets,

with We on energy reliable fleet continue levels deliver service during availability for availability to generation our our natural our delivery the across customers availability remained system. Despite quarter, for XX% peak total our dependable industry above electric to facilities. generation the through standard gas total near for outages, demand provide our safe and our Dakota and South unplanned with units, commitment XX% including

excellent. the to we experienced forward complete that reliability We took some major The customers unplanned opportunity also future our to deliver bring maintenance on outages. quarter was utility and this units

value all is reliability our delivering for Our new territories. and focus on a customers attracting of customers value our is key driver to in service

third our serve the quarter, we center starting Meta's in the XXXX first Cheyenne, to time plans frame. During Wyoming, announced data in

capital-light receive hyperscalers on track our our As the demand for we excited future, model capital to serve inbound plan we look for expand are with to beyond $XXX year. and load with continue requests to the to Cheyenne. We remain million

plan Wyoming serve electric reached and access. communities to will our to Our energy this Dakota to maintain BBB+ solid stability key and expanded debt benefit ongoing We our and credit or resiliency capitalization we cost a capacity customers equivalent customers project ready Maintaining with remains includes and interconnects This safely, our focus. in strategically as infrastructure. Notably, systems, critical is plan effectively. reliably position target delivering milestones transmission the enhancing Wyoming our commitments capital the we to energy regional of rating. made cost and our market transmission upon expansion which financial financial achieved our investment South our our our

our execute our the for in strategy completed our growth. customer-focused team year Our needs we funding major financing as

for implemented in our advanced of at rate customer Gas, we a settlement Electric. new approval regulatory rates at accrual through commission which new which received We Colorado we process and the for quarter, Arkansas regulatory request our continue is third for review We We're rates Iowa to serve needs. We were X. of in Gas, the achieved provided During pending as initiatives. customers' currently confident energy reviews remain on earnings targeting per a We're guidance $X on our cadence in February. investments outlook by annually, to our to our financial growing issued X to of our deliver on originally X rate Slide $X.XX track range driven October. share

the financial year. impacts and generation rates or and X expense. We place in of the X in line entered weather, expectations unplanned interim we successfully year-to-date performance quarter were with for outages gas increased of with heating the rates Our insurance our as at our new mild peak this season met utilities

resulting our ahead, billion. resource X% long-term we plans. electric from us capital plan. execution our and target. Slide growth our confidence in our strong current our growth continued to X-year $X.X In achieving X-year gives investment of recent generation period, displays opportunities invest includes investments expect Looking EPS billion Over our our X forecast plan $X.X to X% initiatives XXXX,

XXXX, are arrows contracts indicated status will energy resource we update. In of negotiated, of opportunities the timing by gain clarity and more cover our the chart. updated. investments XXXX timing, Marne incremental our anticipate be as needs the business plan to costs As her around we and our customers to be will the as above green of and plans these added

forecast and summary XXXX quarter provide earnings center our a we updated and earnings data X reminder, our XXXX. Slide our blockchain of call capital growth opportunities. fourth an in hyperscale provides will through As at guidance February, a

have energy a decade, energy center Microsoft's capital a we served For market procurement more than data through model. needs successfully

providing market a Our lieu enabling in innovative of new in of energy investment. efficiently generation instrumental tariff is return procuring a while win-win

contribution earnings X% before Kimberly, expect more summary, by over grow XX% from of XXXX the customer to progress. turn than our XXXX. In I'm EPS strategic type call total of with to EPS this from in I pleased to continue to We

growing Our territories electric with and investment gas service and strong opportunities. stable are

turn With call to position and regulatory Kimberly? our recovery are the I'll Kimberly Our growth over pursue as that, solid, is our for financial we on executing financial update. we initiatives.

everyone. morning, good and Linn, you, Thank

were the our net completed are with and earnings Linn line key expectations, we XX%. debt our financing results our to third activities track We in financial As on target achieved capitalization deliver and our year. to quarter targets of on and guidance mentioned, for

We X% strategy year. rate we to deliver drivers share $X.XX quarter new growth are period executing margins X%. Despite share achieve financial compared compounded reported the costs we commitment per mild weather XXXX. third to this We same in our to $X.XX compared our are by on the annual other and financial cost EPS to managing X objectives. Slide shows EPS last made to year, delivering our per on to our pressures grow and unexpected QX

exes, positive and and unplanned by premiums, per driven prior year off-system [indiscernible] higher increased year lower off-system $X.XX of insurance associated lower due share, per sales of customer share generation and the outages, $X.XX from increased XXXX. higher delivered gain services, outside total strategy. These expense service. of expenses $X.XX. prior a $X.XX O&M per through expense margins, and from outages benefits. land delivered by to rates in our and $X.XX electric utilities, new $X.XX Through $X.XX rider electric proceeds. We year-to-date drivers on usage. These generation new interest share and a with offset utilities data employee center sale share from recovery rates driven include benefit demand. share prior drivers $X.XX outages, year our per by of new sales offset from to were $X.XX due new we while growth a new unplanned $X.XX of $X.XX recovery margins a X from by costs $X.XX insurance margins margin $X.XX the Depreciation comprised utilities rates our and operating utilities, gas our customer. Interest from $X.XX share including rider higher generation primarily of quarters, placed of includes per lowered and onetime center assets gas New QX per of to and new increased execution of data which margins of displays our successful EPS shares earnings new unplanned

to offset experience off-system by prior year. same and unfavorable to generation $X.XX unfavorable. margin. year benefit growth weather $X.XX growth Additionally, was customer proceeds. We unplanned with usage, our insurance of compared margin of jurisdiction last normal, $X.XX sales, year-to-date the contributed mild a from and to weather was our we increased This partially in per continued share which Compared period experienced outages EPS

XXXX, As natural gas recognized a became share in benefit commodity mark-to-market we year-to-date of prices per $X.XX stable more moderated and year-over-year.

by financing mild energy off-system placed generation Moving over unplanned X.X% and tax of $X.XX compared mild shares expense more to prior our EPS success summary, our last to new same sales, O&M. expense team's in issued rising sales expense to rates. expect and Income mesh our and or by lower growth expenses weather, year a and benefit costs was new $X.XX and year increase to $X.XX gains depreciation amortization in and unplanned needs. growth prior impact with no than insurance year-to-date management and and mitigate O&M $X.XX our outages have a serve our managing costs tax per from I'm expense, generation X.X% pleased on increase state be events, by Nebraska service. benefited interest to cost increased year. prudent more excluding O&M interest prior income margin year, costs. outage managed strong $X.XX below a and was incurred share, investments of extremely X.X% prudently due unplanned from year-over-year Financing we onetime due higher benefits which XXXX. year expenses included period annual offset drove rate of the assets to our of driven land. Throughout increase Depreciation for higher offset outages the to O&M related O&M the decrease. In $X.XX projected generation assets than in XXXX weather, $X.XX from expenses to

share, earnings found details onetime per execution period the EPS $X.XX filed same excluding is last Further later XX-Q recurring with be grew year. strategic year-over-year today. changes compared in benefits and be the our SEC can to Our year-to-date to delivering on growth, of release prior earnings X%

our financial structure and lens liquidity. quality, Slide which XX, to depicts credit Turning through the solid position capital of

capitalization continue maintain net debt to total other commitment to reduce our and key credit ratio improve and We metrics our to target. quality credit BBB+ our

new equity which program trade. included During $XXX our of issued at-the-market under block a million the equity quarter, equity we

planned our issuance which within of million XXXX. As a a to million $XXX million have result, year-to-date, of we $XXX range equity total issued is for $XXX

under long-term We industry-leading next and important strong facility. I We value quarter notes we million early for are earnings growth, $XXX million of is credit to years. comparable a maturity consecutive $XXX options Our refinancing XX liquidity dependable in update. call component growing for and of to August, remained delivering record matured an revolving our strategy our anticipate illustrates $XXX of that and our the a our over turn with dividend rate dividend of dividend in XX end shareholders. XXXX. Slide at million availability Marne at timing repaid our now our track business for for will our increasing our evaluating

you, morning, comments Thank my on good Kimberly, I'll everyone. start Slide XX. and

the X-year As during continue reputation utilities of in upheld strong And reflected the culture of the growing data our Linn supports also we is liability third our by XXXX. average to through industry-leading reliability excellence our while all quartile demand. electric quarter. top of center important customers, to it electric as We mentioned, reliability X recently critically EEI our for operational demonstrate for with our

XX, strong a plan employer the requirements, to also and that of last dedication to the in the for serve and with meet bring higher plans they fifth leadership resources generation and all efforts team our veterans. on Hills share status our value also Labor year. advanced we resiliency. with Black maintaining Energy Colorado update for rate award our nation's During veteran growth awarded This enhancing week, employing while our We retaining provide to culture. On the award Department consecutive and Slide and U.S. the I'm proud Medallion our new Clean our reliability recruiting, recognizes Vets colleagues our reviews. and organizations I'll quarter,

for of million includes The approved on constructive received XX% which for on during a rates reach allowed effective In In pending quarter. new revenue $XX.X in reached we new XXXX capital. The return review IO provides results to settlement of by settlement Commission of revenue rate average quarter Iowa, equity. annual of final for based of X.XX% rates. of replace the settlement weighted continued October. interim implementation approval in the new X.X% allows we Arkansas, equity the rates million will settlement based a Utility the the request, our We which annual cost on $XX a confidential approval and first

received We answer for Our review from active Colorado with testimony rebuttal other due the will this October, testimony week. is in we later rate and Electric. interveners respond

risk socket wildfire the is management hearing our mitigation XX December. Slide outlines Our and plans. for scheduled on

been detailed programs have plan in We wildfire response, on integrity through operational successful in programs, multilayered our and our mitigation with our risk website. reducing approach asset available which is

and We Shutoff and engage including expect community Power program continue first bodies and mitigation peers management advance our Public our our stakeholders, XXXX. wildfire to the review legislative which PSPS including industry of we to half agencies to regulators, define, or Safety formalize and in local plans,

on to Slide XX. Moving

Our largest XX an capital completed rider tracking The in project segments and Wyoming are later for this Yesterday, year-end line authorized PPA. XXX-mile schedule, Colorado we active the project. is Wyoming XXX on on are project solar Ready by as our solar, first Commission update year. to placed is XX expected deliberated Plan. The service. Slide being provides XXXX. this transmission megawatts utility-owned our be Energy constructed to service of storage investment Clean The in project place is through megawatts utility-owned recovered and and battery be will of XXX-megawatt verbally a segments Colorado our our transmission

expect a expect XX and we written Dakota Electric decision year-end, selected the counterparties contract we negotiations deliberations, following the plan. with resource commission initiate final decision. Slide South to recent the written With our outlines before

cost pursue customers. to that effectively of generation will XXX reliably our continue serve We utility-owned megawatts and

convenience South request to Dakota public the Linden. from for We generation. We will an a With and XXXX. natural turn call of quarter of the to the third back that, half and are dispatchable the date permit megawatts PUC construct Dakota second fire during a and a targeting plan of pre-application PUC necessity in-service Wyoming and with in the from early over PSC XXXX South the to certificate filed I gas XXX

and on energy invest Thank our for we again, delivery in our resilient customers. initiatives as strong you, reliable made progress our Once Marne. team strategic safe,

our data We execute strategic load growth continue growth. including plan our opportunities, to regulatory blockchain serving aggressively and and pursue center

Finally, to customers our my I happy for of year. serving Hills appreciation while questions. through And effectively managing we'll that, sincere express to with team be efficiently take want the your to challenges and unexpected the Black

Instructions]. [Operator

Andrew question first Scotiabank. from with Our comes Weisel

you earnings? times the mentioned more is question exactly outages first of a unplanned the you what was My O&M Can the little impact And couple there. on detail what give to were a issues?

let us Andrew, question. of for and side thanks off, on Kimberly the this kicked in is jump the it. financial Marne get I'll and I'll

one this quarter, just driven had quarter, Last of the a that had So part components QX. we rollover. into we failed. rolled some by announced we those outages outages And a over couple that of early of

that side And to There impact. of from turn over outages the this it. quarter. was impact was Kimberly no it so And I'll the financial additional

Are year, you Yes. the for the or asking for Andrew? quarter

that. Both can share if you

well. $X.XX on at side can as you look respectively. they're margin the slides believe and impact I look from Yes, the total, But when that you it it's you include at, in the $X.XX,

you outages. the see from collective so and O&M can you will impact what Hopefully, at look you And get the the the from margin need. both you implanted impact if the that slides,

reiterating I believe lines, Great. Yes. for those year. then guidance that. Perfect. I the appreciate And along the you're

negatives, You some range mitigating better-than-expected comment be trends end? are you're the mentioned or those middle with and high, you where O&M low trending within able you that might to

the in fact we range. objectives and we financial we achieve out No, the we're reaffirmed to laid that the have range that year. don't just Andrew. comment where we've for at question, the on Great the expect

supports huge to service early has of and President-elect be it's territory only it a that. and we've all positioned those Any more you that since results, the spike clear made in the the little and crypto Fair price and that in blockchain benefit. might mean what and on XX than administration Mix terms high-level incoming are positioned and your but enough. question, he a thoughts you election and industries, we've been bitcoin very industry And might known crypto. Trump I well uniquely guys obviously, Okay. seen is for realize how level of a hours

that what's We our our it. best like with energy them needs. respect customers we it's you Thank Andrew, for question. because appreciate this I focused serve our help how for really I'd to I to -- is on strategy like and guess Linn. their customers

we're what say so fairly And to agnostic federal would we're that -- I might be in policy regard.

think tend However, serve our of is lot your it forward, I particularly benefit sentiment to been what than yes, most. policy serving data a But going states and certainly a will for in have where That's going the say at we correct. having our we have And it. customers. we We've indeed more our right [ and we good for how that, could decade. forward. We're know ] centers for think a or us focus

Okay.

centers. data said You

you these right? think I though, other meant customers,

did. I

all Just in them treat general, we same. largely the

for tariffs each them. quality them provide service reliability that cetera. is understand we is different have critical, We critical one, et The we to but

of if tariffs of that So but way, you of them things serve same we different kind will, all forms the of nature. kind obviously, and

Our with Ellinghaus next SWS. Chris comes from question

of there us of Linn, about upside talked any expecting there give you're the persistently years you you've new loads? the any that? sort insights cadence you're to Can large sort of customers. kind from on load Are particular expecting? what Is

served one they're cadence, over their headed we just for Yes. that you, meet of measurements a I'll where call, The they of those anchor of question. and Thank inform understand kind for lockstep. is Chris, decade our, beauty they having our tenants us what

It's So the quarter. center of smooth of the that come actually XXXX. last Meta goes data we're announced relatively They currently. We serving with kind very full. end well on

gradually of kind on as come they'll -- be will well. that so And

centers as have a is that they they And -- come say they can of they as that So I tell cetera. the beauty, expand. land I Cheyenne, then on grow they the frankly, that bought think that around cadence can serving and and have data calls we're these I et you that's

for time. expansion we on So some going see

you seeing sort AI investment computing at any in Are of point? this given acceleration the

dependent. I take. a inbound rich still And historically, that the in don't the optic understanding we've stronger We've the AI, center, there's fiber is for fiber Cheyenne interest terms seen the place of because in And of is data my has know acceleration. we seen calls network for great very region. with that less such Cheyenne us, if is been

of of territory gained so And possibility service us bringing other we the set by advantage. centers actually our skill that some particularly than our that parts give the we're in encouraged can AI and data decade, having last over centers we've think

new intertie The also into factor that?

Didn't ACDC tie, I'm quite new understand the -- sorry? the

Yes. Are there thinking? reliability

thinking. take always It reliability and separate here grids. energy The X It across to of is us Rapid for forth It certainly kind City. grid boundary some any our does to flexibility customer, yes. impacts a gives at back right

deal we're with that So to accustomed that. to how to know

The you're of to to have want CapEx you Okay. about? thinking that you in that the add upside -- the that color of got types to investments slide any terms

to transmission center analogy investments right us The both on the the tend golf types to use gas the of for of be side. fairway down electric and

storage customers afford. We projects more maybe and have that some could our perhaps gas argue could We've capital got frankly, opportunities. you

us what's what us that to best So always for effectively for shareholder. the balance them generate a then return sure that allows serve we effectively costs make it's and of customer,

a Given to the little and bigger fourth of the ask And expecting results for can quarter you quarter. you number of of sort fourth is the that Kimberly, any that quarter? a pretty are I sort year, guidance of the is Okay. differently? issues where the O&M that factor? strong drive suggests Can question address And the third part range

Yes.

you the QX, favorable you look our O&M at actually about year back was when So and our to prior QX comparative year, quarters. think full

been managing And so we've O&M.

out started continued. pretty that's weather with year and Our mild

to And outages, experienced. so O&M that we're some focused how insurance that's increases cover expense really of address managing on unplanned the we've

weather, our as cetera, year, O&M really planned for. we're well call, we really behalf trying et as challenges manage was we're that's I'm we of you making with And these, on think right on look we capital so increase how about that about started on unexpected as what managing With it diligent -- investments focused now investments the forward, of as really a year-over-year we're sure that X.X% some to insurance, customers. our it sorry, how capital I'd

how given how thinking think here we've we're that guidance about I that thinking the help guidance growth we're the to about for you X% achieve earnings should X% you and year.

team Chris, the is an this we that more not up could incredible and return be of very how our control way, shareholders well. Linn. And has then costs customers as I proud behalf stepped on on how provide laser-focused of

want how the just helpful year I a a fourth our to and how focused to out and to been So going take and this been team say moment shout they've into quarter. big they've past

probably I don't I'm sure. -- Marne, recall who it was not

on, took Does you of O&M from? forward what of that Or longer-term to that have mentioned maintenance the outages XXXX? some that do Somebody maintenance. say, effect drawing some advantage an was period

is this Yes, Marty.

opportunity have the Typically, do [ looking opening where we it's we maintenance. machine, ] some that pull hat to It's really more find we larger when up forward. when of to out years on an open you're that that So what pulling these dependent of up. outages we're forward of

question Dumoulin-Smith next Our comes with Julien Jefferies. Instructions] [Operator from

for or Is your X% anchor X project around contribution more announced And XXXX? Julien. commentary these of Russo given that tenant? It's to a [ XX% growing on ago? are now? by driving month the current the just that the there there really opportunity any center ] meta Is Or Brian EPS projects is growth, that data also

data those Brian, it's It land they're those, Their loads couple would this Marne purchasing. evolve time. Linn anchor an to generally A Kimberly. of there. mentioned, includes But over the is comments mentioned and tenant. meta. mentioned, center -- continue say Yes, Linn Microsoft as and that I

February. One forecasts that as are, this meta opportunities. But future updating we our note of work both capital and including XX% are with and thing just be inbounds So what Dakota. in additional we're there South their We Colorado I'd to announced growth. obviously will point, at Wyoming, conversations we all and we earnings X% that getting in on is focused and Microsoft and both not QX having that other in go are guidance evaluate to into

that also territory. future as in our continue to data inform potential with will centers we So other partner growth our EPS

Wyoming. was lot mentioned customers that these look Colorado customers set very actually to Dakotas next sort a these Yes, up Wyoming of my A you states. in other are or as of LPCs in going you kind some that BCIS structure outside that active in tariff be to Will question the of and similar of well. are receptive to these

is Brian, that is for and ourselves shareholders. Thanks answer Linn. we good question. doing in I'd we this think the for say is customers maybe, pride what really

flexible. be we'll So

we size but have shareholder. sure of also to our -- we that for and we can lots because protect we the customer that them. what can well could multiple we tariffs And agile, our of the modify making for We avenues use, and serve do different multiple -- is ability us, be does think

approach my that. that's So to

back I over Linn you. for turn now remarks. any would Thank Evans call like to to the closing

a for travel with to a to sincere safe. say Hills We'll engaging Well, the once you interest team. Black I forward this and for of so you you We again, good thank starting to your please thank joining in EEI, you thank and want look especially Black weekend today at Hills. us you number be morning again, there. And seeing

we make sure and done excellently. that. our you've to really has Just up of year our appreciate customers serve all And this how shareholders us stepped

a Hills everybody Energy so safe day. much. have Black Encourage you Take thank So care.

conference. Thank This you you. for Thank participation. the your concludes

You disconnect. may now