Slide 1: 2023 Fourth Quarter and Full Year Review
2023 Fourth Quarter and Full Year Review Feb. 8, 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 ✓ Provided industry-leading reliability ✓ Delivered on earnings guidance ✓ Achieved constructive regulatory settlements RESILIENT. RELIABLE. ✓ Improved debt to total capitalization ratio READY. ✓ Increased dividend 54 consecutive years in 2024 ✓ Advanced growth in
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 Five-year forecast increased by $800 million to $4.3 billion Investment * Future dividends subject to board approval BKH | 2023 Fourth Quarter and Full Ye
Slide 5: 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 Achieve internal cu
Slide 6: Q4 2023 Financial Review
Q4 2023 Financial Review
Slide 7: 2023 Financial Review
2023 Financial Review Successfully Delivered on Earnings Guidance EPS Operating Income $3.97 $3.91 (millions) $249 $229 $1.82 $115 $1.73 $83 $81 $1.11 $1.17 $61 $58 $0.67 $47 $0.52 $0.54 $0.35 $18 $15 Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year 2022 2023 Electric Utilities Gas Utilities BKH | 2023 F
Slide 8: 2023 EPS Earnings Drivers
2023 EPS Earnings Drivers New Margins Offset Impacts of Weather, Inflation and Interest Rates New Weather Operational 2022 EPS Margin and MTM Expenses Financing Tax Other 2023 EPS $0.63 ($0.28) $3.97 $0.05 $3.91 $4.00 ($0.25) ($0.19) ($0.02) Nebraska Income $3.00 O&M Expense New Rates Weather New Sh
Slide 9: Strengthening our Balance Sheet
Strengthening our Balance Sheet Robust Cash Flows, Disciplined Capital Management and Strong Financial Execution ✓ New rates and rider recovery Strong Operating $945 million* ✓ Customer growth Cash Flows ✓ Recovery of elevated natural gas cost deferrals ✓ Disciplined management of capital plan Capit
Slide 10: Solid Financial Position
Solid Financial Position Committed to BBB+ Equivalent Credit Ratings Credit Ratings Liquidity and Cash Flow (millions) S&P Moody’s Fitch $1,000 $250 million accordion feature FFO (with bank consent) Adjusted $750 FFO / Debt Leverage BBB+ Baa2 BBB+ $750 million revolving credit facility $500 Stable o
Slide 11: Dividend Track Record
Dividend Track Record 54 Consecutive Years of Annual Increases in 2024 and 82 Consecutive Years Paid* $2.60* Increased Quarterly Dividend 5% CAGR 55%-65% long-term 4% on Jan. 26, 2024 2019-2024 payout target Dividend growth rate in line with EPS* 1970 1980 1990 2000 2010 2020 2024* Annual Dividend P
Slide 12: Business Update
Business Update
Slide 13: Operational Excellence
Operational Excellence Delivering Safe, Reliable and Cost-Effective Energy Industry-Leading Electric Reliability Dependable Natural Gas Service In mid-January, we reliably served our customers during subzero conditions across our service territory EEI 2022 Overall System SAIDI (Excluding Major Event
Slide 14: Ready Wyoming Electric Transmission Initiative
Ready Wyoming Electric Transmission Initiative WYOMING SOUTH DAKOTA 260-mile Project to Further Interconnect and Expand Wyoming Electric System • Maintain long-term cost stability for customers • Enhance system resiliency to withstand stress events • Expand access to power markets and provide flexib
Slide 15: Responsibly Reducing GHG Emissions
Responsibly Reducing GHG Emissions ▪70% by 2040 1 2 ▪40% by 2030 1 ▪ One-third reduction from 2005 ✓ ➢ Replacing aging and at-risk materials ➢ Leveraging operational best practices and ➢ Adding new renewable generation and processes, leading technologies and integrate battery technology advanced lea
Slide 16: South Dakota Integrated Resource Plan
South Dakota Integrated Resource Plan Delivering a Reliable, Clean and Cost-Effective Grid of the Future ✓ Q1 2023 – Issued RFP for 100 MW of utility-owned renewable generation ✓ Q2 2021 – plan filed ✓ Q1 2024 – Added estimated project investment to capital forecast ✓ Plan reviewed by South Dakota P
Slide 17: Colorado Clean Energy Plan
Colorado Clean Energy Plan 400 Megawatts of New Renewable Resources to Reduce Emissions 80% by 2030* ✓ Q2 2022 – Clean Energy ✓ July-October 2023 – Issued RFP for 400 MW of renewable resources Plan filed ✓ Q4 2023 – Submitted bid summary to Colorado PUC ✓ Opted in to 80% by 2030 legislation* ✓ Q1 20
Slide 18: Regulatory, Growth and Strategy Update
Regulatory, Growth and Strategy Update
Slide 19: Rate Review Progress
Rate Review Progress Annual New Filing Revenue Rates Jurisdiction Date Increase ROE Debt / Equity Effective Comments / Status ✓ xWyoming Electric Docket 20003-214-ER-22 June 1, 2022 $8.7 million 9.75% 48% / 52% March 1, 2023 Settlement approved for new rates and transmission investment and expense r
Slide 20: 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 $800 • Customer growth • Safety and system integrity projects $600 • Replacement and modernization programs $400 • Electric generation
Slide 21: Customer-Focused Initiatives
Customer-Focused Initiatives Transmission Data Centers Blockchain Renewable Moving Energy and Storage Natural Gas Forward • Ready Wyoming • 10+ years serving • Scalable tariff in • 6 interconnects in • Advancing culture of electric transmission data centers place in Wyoming service; 4 new innovation
Slide 22: Capital-Light Opportunities
Capital-Light Opportunities Current and Future Growth in Data Centers and Blockchain Contributing ~5% of current EPS with opportunity to increase to ~10%+ by 2028 Trusted Innovative Ideal Energy Partner Service Model Location ✓ 10+ years serving data centers ✓ Innovative Large Power Contract ✓ Tempe
Slide 23: Strategic Execution Delivers Results
Strategic Execution Delivers Results 9.6% Rate Base1 CAGR 5.9% Earnings CAGR 5.3% Dividend CAGR $5.6 2.0% EPS CAGR 53 Years of Consecutive $3.97 $3.91 $5.3 $3.73 $3.74 $4.00 Increases in 2023 $3.54 $3.53 $4.8 $250 $3.50 $4.4 $3.9 $3.00 $200 $3.6 $2.4 $2.50 $2.2 $2.1 $150 $2.0 $2.00 $1.7 $1.7 $100 $1
Slide 24: 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 1 • Long-term growth rate in line with EPS 2 • Integrated pure-play utility profile • Constructive regulatory jurisdictions •
Slide 25: Questions
Questions
Slide 26: Appendix
Appendix
Slide 27: Q4 2023 Earnings Drivers
Q4 2023 Earnings Drivers Change in Net Income Available for Common Stock Electric Natural Gas Interest Q4 2022 Margin 1, 2 Margin 1, 2 O&M DD&A Expense Other Taxes Q4 2023 (millions) $4.4 $80 $1.4 $79.6 $1.4 New rates and rider ($0.9) recovery ($2.5) $2.9 $0.4 $75 Lower outside services $72.5
Slide 28: 2023 Earnings Drivers
2023 Earnings Drivers Change in Net Income Available for Common Stock (millions) Year-to-Date Electric Natural Gas Interest Year-to-Date 2022 Margin 1, 2 Margin 1, 2 O&M DD&A Expense Other Taxes 3 2023 $285 $23.9 New rates and rider ($2.3) recovery $275 ($2.9) ($4.6) Gains on sale of non- core w
Slide 29: 2024 Earnings Guidance Assumptions
2024 Earnings Guidance Assumptions Black Hills initiated its guidance for 2024 EPS available for common stock to be in the range of $3.80 to $4.00 based on the following assumptions: • Normal weather conditions within our utility service territories including temperatures, precipitation levels and w
Slide 30: Income Statement
Income Statement ($ in millions) Fourth Quarter Full Year 2022 2023 2022 2023 Revenue $ 791.4 $ 591.7 $ 2,551.8 $ 2,331.3 Fuel, purchased power and cost of natural gas sold (436.9) (233.1) (1,230.6) (982.9) Operations and maintenance expense (144.9) (139.5) (548.4) (552.0) Depreciation, depletion an
Slide 31: Capital Structure
Capital Structure ($ in millions) Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Capitalization Short-term Debt $ 1,061 $ 525 $ 525 $ 1,125 $ 600 Long-term Debt 3,607 3,954 3,956 3,800 3,801 Total Debt 4,668 4,479 4,481 4,925 4,401 Equity* 2,995 3,098 3,110 3,167 3,215 Total Capitalization $ 7,663 $ 7,577 $ 7,5
Slide 32: Utility Weather and Demand
Utility Weather and Demand Electric - Degree Days Electric Utility -Total Gas - Degree Days* Gas Utility - Total Total for all electric service areas MWh Sales Total for all natural gas service areas Dth Sales weighted by customer count weighted by customer count (in millions) (in millions) 1.8 1.9
Slide 33: Electric Generation Capacity and Performance
Electric Generation Capacity and Performance Owned Generation Capacity* Electric Generation Availability 1,600 1,394 MW 100% 1,400 90% 1,210 MW 15% 1,200 80% 6% 70% 1,000 60% 807 MW Percent of Total Capacity 800 57% 62% 50% 37% 40% 600 30% 400 20% 63% 200 32% 28% 10% 0% 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Slide 34: Normalized EPS Seasonality
Normalized EPS Seasonality EPS, as adjusted* 2019* Q1 Q2 Q3 Q4 FY / YTD $1.73 $0.24 $0.44 $1.13 $3.53 EPS, as Adjusted, Normalized for Impacts of 2020* $1.59 $0.33 $0.58 $1.23 $3.73 2021 $1.54 $0.40 $0.70 $1.11 $3.74 Weather, Mark-to-Market and Winter Storm Uri* 2022 $1.82 $0.52 $0.54 $1.11 $3.97 20
Slide 35: Electric Utilities Capital Investment
Electric Utilities Capital Investment Five-year Forecast of $1.6 Billion Focused on Safety, System Integrity and Growth Forecasted Capital Investment By Type 58% with Timely Forecasted Capital (millions) Recovery* by State $500 $466 $409 $400 SD Rider 40% $287 Minimal Eligible $300 $264 Lag 29% 29%
Slide 36: Natural Gas Utilities Capital Investment
Natural Gas Utilities Capital Investment Five-year Forecast of $1.9 Billion Focused on Safety, System Integrity and Growth Forecasted Capital Investment By Type 81% with Timely Forecasted Capital (millions) Recovery* by State $500 $407 $387 $400 $368 $372 $373 CO Rider Eligible 18% IA 36% 10% $300 K
Slide 37: Investing for Customer Needs Drives Growth
Investing for Customer Needs Drives Growth $4.3 Billion Capital Investment Forecast (2024-2028) (in millions) Utility Investment Customer Focused Timely Recovery Safety, Reliability and Integrity Rider Eligible $2,640 $1,158 Focused on Primarily rider Diverse mix of safety, Other Electric Gas Minima
Slide 38: Capital Investment by Segment and Recovery
Capital Investment by Segment and Recovery (in millions) 2023A 2024F 2025F 2026F 2027F 2028F 2024-2028F Minimal Lag Capital - Electric Utilities1 $30 $58 $93 $291 $7 $15 $464 2 Rider Eligible Capital - Electric Utilities 81 221 117 60 41 27 466 3 Growth Capital - Electric Utilities 19 23 38 21 23 18
Slide 39: Regulated Utility Capital Investment by Type
Regulated Utility Capital Investment by Type (in millions) 2023A 2024F 2025F 2026F 2027F 2028F 2024-2028F Safety, Reliability and Integrity1 $153 $354 $230 $416 $142 $222 $1,364 2 Growth 37 33 41 23 25 19 140 General Plant 20 23 16 28 31 23 120 Electric Utilities $211 $409 $287 $466 $199 $264 $1,625
Slide 40: 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. 2022 9.60% 55% debt / 45% equity $674.6 Colorado Colorado Electric Jan. 2017 9.37% 47.6
Slide 41: Estimated Rate Base by State and Segment
Estimated Rate Base by State and Segment 2018 2019 2020 2021 2022 2023 Colorado $762 South Dakota (all jurisdictions) $1,066 Wyoming $550 Total Electric Utilities $1,706 $1,747 $1,954 $2,077 $2,212 $2,379 Arkansas $783 Colorado $613 Iowa $353 Kansas $277 Nebraska $771 Wyoming $459 Total Gas Utilitie
Slide 42: Winter Storm Uri Recovery Approved and Progressing
Winter Storm Uri Recovery Approved and Progressing ($ in millions) Winter Storm Uri Estimated Cost Recovery* Recovery Recovery Recovery (millions) Jurisdiction Amount* Period Completion $600 100% 120% 93% 99% Arkansas Gas $137.5 5 years Q2 2026 $500 83% $543 $546 100% $508 $400 63% $452 80% Colorado
Slide 43: Non-GAAP Financial Measures
Non-GAAP Financial Measures Gas and Electric Utility Margin Gas and Electric Utility margin (revenue less cost of sales) is considered a non-GAAP financial measure due to the exclusion of operation and maintenance expenses, depreciation and amortization expenses, and property and production taxes fr
Slide 44: Non-GAAP Financial Measures
Non-GAAP Financial Measures Net Income Available for Common Stock and EPS, as adjusted We have provided non-GAAP earnings data reflecting adjustments for special items as specified in the GAAP to non-GAAP adjustment reconciliation table in this presentation. Operating Income (loss), as adjusted, Inc
Slide 45: Non-GAAP Financial Measures
Non-GAAP Financial Measures Earnings before Interest, Income Taxes, Depreciation and Amortization Three Months Ended December 31, Twelve Months Ended December 31, (in millions) 2022 2023 2022 2023 Net income $ 76.1 $ 83.2 $ 270.8 $ 276.0 Depreciation, depletion and amortization 62.3 65.6 250.9 256.8
Slide 46: Non-GAAP Financial Measures
Non-GAAP Financial Measures Earnings, as adjusted (in millions) Earnings Per Share, as adjusted Annual Earnings and EPS, as adjusted 2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 Net income (loss) available for common stock $ 258.4 $ 199.3 $ 227.6 $ 236.7 $ 258.4 $ 262.2 $ 4.66 $ 3.28
Slide 47: Vision, Mission and Company Values
Vision Be the energy partner of choice. Mission Improving life with energy. Company Values BKH | 2023 Fourth Quarter and Full Year Review | Feb. 8, 2024 | 47
Slide 48: Strategic Objectives
Strategic Objectives BKH | 2023 Fourth Quarter and Full Year Review | Feb. 8, 2024 | 48
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