Black Hills Corporation · NYSE:BKH
Black Hills — Q3 2024 Earnings Presentation
32 slides from Black Hills's earnings presentation, Nov 7, 2024
Slide 1: 2024 Third Quarter Review
2024 Third Quarter Review Nov. 7, 2024
Slide 2: Forward-looking Statements
Forward-looking Statements COMPANY This presentation includes “forward-looking statements” as defined by the Securities and Exchange Commission. We make these forward- INFORMATION looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Ac
Slide 3: Delivering Results for Stakeholders
Delivering Results for Stakeholders Providing excellent operational performance Delivering on financial commitments Advancing regulatory and growth initiatives BKH | 2024 Third Quarter Review | Nov. 7, 2024 | 3
Slide 4: Financial Outlook
Financial Outlook 2024 Guidance range of $3.80 to $4.00 EPS Long-term 4% to 6% growth target* EPS Growth Dividend 55% to 65% payout ratio** Capital $4.3 billion five-year forecast (2024 to 2028) Investment * Average annual compound growth rate off 2023 base of $3.75 per share ** Future dividends sub
Slide 5: Investing for Customer Needs Drives Growth
Investing for Customer Needs Drives Growth $4.3 billion Capital Investment Forecast 2024-2028* (millions) $1,400 $1,200 Anticipating incremental $1,000 opportunities • Customer growth • Safety and system integrity projects $800 • Replacement and modernization programs $600 • Electric generation and
Slide 6: Innovatively Serving Data Center Growth
Innovatively Serving Data Center Growth Capital-Light Model Benefitting Customers, Communities and Shareholders Contributing ~5% of current EPS with expectation to increase to ~10%+ by 2028 Trusted Innovative Ideal Location Energy Partner Service Model in Cheyenne 10+ years of successfully Innov
Slide 7: Q3 2024 Financial Review
Q3 2024 Financial Review
Slide 8: Q3 2024 EPS Earnings Drivers
Q3 2024 EPS Earnings Drivers Income Q3 2023 Margin Weather MTM O&M Financing D&A Taxes Other Q3 2024 $0.02 $0.01 $0.70 $0.67 ($0.00) New rates $0.60 and rider recovery +$0.15 $0.50 Customer growth +$0.01 ($0.23) $0.40 Lower off- system sales O&M $0.35 ($0.07) $0.03 ($0.03) ($0.15)* Unplanned ($0.05)
Slide 9: YTD 2024 EPS Earnings Drivers
YTD 2024 EPS Earnings Drivers Income YTD 2023 Margin Weather MTM O&M Financing D&A Taxes Other YTD 2024 $3.25 $0.37 $0.03 $3.00 $2.74 ($0.14) $2.75 ($0.10) New rates ($0.17) $0.03 $2.52 $2.50 and rider ($0.12) recovery O&M +$0.52 +$0.09 ($0.12) $2.25 New shares Customer Unplanned ($0.10) $2.00 growt
Slide 10: Solid Financial Position
Solid Financial Position Committed to BBB+ Equivalent Credit Ratings Credit Ratings Liquidity and Cash Flow (millions) Moody’s S&P Fitch $1,000 $250 million accordion feature FFO Adjusted (with bank consent) Baa2 BBB+ BBB+ $750 FFO / Debt Leverage Stable outlook Stable outlook Negative outlook $500
Slide 11: Dividend Track Record
Dividend Track Record 54 Consecutive Years of Annual Increases in 2024 and 82 Consecutive Years Paid* $2.60* 5% CAGR 55%-65% long-term 2019-2024 payout target Dividend growth rate in line with EPS* 1970 1980 1990 2000 2010 2020 2024* Annual Dividend Per Share * Future dividends subject to board appr
Slide 12: Business Update
Business Update 12
Slide 13: Industry-leading Reliability
Industry-leading Reliability EEI 2021-2023 Overall System Three-Year Average SAIDI* (Excluding Major Events) Black Hills’ Electric Utilities EEI Utilities * System Average Interruption Frequency Index (SAIDI) is a measure of reliability calculated as total system interruption duration (in minutes) d
Slide 14: Rate Review Progress
Rate Review Progress • Implemented new approved base rates for Arkansas Gas • Filed settlement for approval for Iowa Gas rate review • Continued regulatory process for Colorado Electric rate review • Preparing to file rate reviews for Kansas Gas and Nebraska Gas in the first half of 2025 Annual Fili
Slide 15: Wildfire Management & Risk Mitigation
Wildfire Management & Risk Mitigation • Prioritization of wildfire management Asset Integrity Operational and risk mitigation for decades within Programs Programs Response safety culture and reliability goals • Wildfire Mitigation Plan available at: • Vegetation management www.blackhillsenergy.com/w
Slide 16: Ready Wyoming Electric Transmission Initiative
Ready Wyoming Electric Transmission Initiative WYOMING 260-mile Project to Further Interconnect and Expand Wyoming SOUTH DAKOTA Electric System • Maintain long-term cost stability for customers • Enhance system resiliency • Expand access to power markets and provide flexibility as power markets deve
Slide 17: Colorado Clean Energy Plan
Colorado Clean Energy Plan Adding New Renewable Resources to Reduce Emissions 80% by 2030* April 2023 – Received approval of plan Commission Preferred Portfolio** Mid-2023 – Issued RFP for new resources • 100 MW solar build-transfer (utility owned) Q1 2024 – Submitted bid summary to Colorado P
Slide 18: Serving South Dakota Electric Resource Needs
Serving South Dakota Electric Resource Needs 100 MW of Utility-Owned, Dispatchable Natural Gas Generation Resources Key Milestones: File for CPCN from Wyoming Public Service Commission* File for approval of a permit to construct from South Dakota Public Utilities Commission Place 100 MW of r
Slide 19: Strong Long-term Growth Outlook
Strong Long-term Growth Outlook $4.3 billion 4% to 6% 55% to 65% Capital Investment 2024-2028 Dividend payout target + Capital-light opportunities Long-term EPS growth target * • Long-term growth rate in line with EPS ** • Integrated pure-play utility profile • Constructive regulatory jurisdictions
Slide 20: Questions
Questions
Slide 21: Appendix
Appendix
Slide 22: 2024 Scorecard
2024 Scorecard Growth & Financial Performance Operational Excellence EPS, growth targets, credit metrics and utility growth Utilize consistent and efficient processes to deliver safe, reliable and cost-effective energy and a great customer experience Achieve earnings guidance Increase dividend 5
Slide 23: 2024 Earnings Guidance Assumptions
2024 Earnings Guidance Assumptions Black Hills reaffirmed its guidance, issued on Feb. 7, 2024, for 2024 EPS available for common stock to be in the range of $3.80 to $4.00 based on the following assumptions: • Normal weather conditions within our utility service territories including temperatures,
Slide 24: Capital Structure
Capital Structure ($ in millions) Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Capitalization Short-term Debt $ 333 420 342 335 501 1,061 525 525 1,125 600 600 600 18 Long-term Debt 4,126 4,127 4,128 4,130 4,131 3,607 3,954 3,956 3,800 3,801 3,803 4,247
Slide 25: Adjusted EPS Normalized for Weather, Mark-to-Market and Winter Storm Uri
Adjusted EPS Normalized for Weather, Mark-to-Market and Winter Storm Uri* EPS, as adjusted* 2019* Q1 $1.73 Q2 $0.24 Q3 $0.44 Q4 $1.13 FY / YTD $3.53 2020* $1.59 $0.33 $0.58 $1.23 $3.73 2021 $1.54 $0.40 $0.70 $1.11 $3.74 2022 $1.82 $0.52 $0.54 $1.11 $3.97 $2.00 2023 $1.73 $0.35 $0.67 $1.17 $3.91 2024
Slide 26: Utility Weather and Demand
Utility Weather and Demand Degree Days Weather Impact Compared to Normal (EPS) Q1 Q2 Q3 Q4 Gas HDD 2,865 587 50 2020 2021 2022 2023 2024 2024 Electric HDD 2,820 757 47 Actual Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Electric CDD - 219 756 $0.10 $0.10 Gas HDD -8% -20% -43% 2024 vs $0.
Slide 27: Last Approved Utility Rate Review Results by Jurisdiction
Last Approved Utility Rate Review Results by Jurisdiction Authorized Authorized Effective Return on Authorized Capital Rate Base Jurisdiction Utility Date Equity Structure (in millions) Arkansas Arkansas Gas Oct. 2024 9.85% 54% debt / 46% equity $823.4 Colorado Colorado Electric Jan. 2017 9.37% 47.6
Slide 28: Electric Generation Capacity and Performance
Electric Generation Capacity and Performance Owned Generation Capacity* Electric Generation Availability 3-year trailing average; includes planned and unplanned outages 1,600 1,394 MW 100% 100% 1,400 90% 90% 1,210 MW 15% 1,200 6% 80% 80% 70% 70% 1,000 807 MW 60% 60% Percent of Total Capacity 800 57%
Slide 29: Non-GAAP Financial Measures
Non-GAAP Financial Measures Net Income Available for Common Stock, as adjusted We have provided non-GAAP earnings data reflecting adjustments for special items as specified in the GAAP to non-GAAP reconciliation table in this presentation. Net income available for common stock, as adjusted, is defin
Slide 30: Non-GAAP Financial Measures
Non-GAAP Financial Measures Earnings, as adjusted (in millions) Earnings Per Share, as adjusted YTD YTD 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 2024 2024 Net income available for common stock $199.3 $227.6 $236.7 $258.4 $262.2 $175.0 $ 3.28 $ 3.65 $ 3.74 $ 3.97 $ 3.91 $ 2.52 (GAAP) Adjustm
Slide 31: BKH | 2024 Third Quarter Review | Nov. 7, 2024 | 31
BKH | 2024 Third Quarter Review | Nov. 7, 2024 | 31
Slide 32: Slide 32