Slide 1: 2023 Third Quarter Review
2023 Third Quarter Review Nov. 2, 2023
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: Key Takeaways
Key Takeaways Providing reliable and safe operational performance Expecting to deliver at top end of 2023 earnings guidance range Continuing to strengthen balance sheet Advancing regulatory and growth initiatives BKH | 2023 Third Quarter Review | Nov. 2, 2023 | 3
Slide 4: Financial Outlook
Financial Outlook 2023 Guidance of $3.65 to $3.85 EPS Long-term 4% to 6% growth target EPS Growth Dividend 55% to 65% payout ratio target * Capital $3.5 billion five-year forecast (2023 to 2027) Investment * Future dividends subject to board approval Note: 2024 earnings guidance, 2024 to 2028 capita
Slide 5: Q3 2023 Financial Review
_03 2 2023 Financial Review
Slide 6: Q3 2023 Financial Review
Q3 2023 Financial Review EPS Operating Income (millions) $191 $3.50 $3.50 $165 $162 $3.00 $2.86 $148 $3.00 $2.74 $2.50 $2.50 $2.00 $2.00 $83 $1.50 $1.50 $69 $1.00 $1.00 $0.67 $0.54 $0.50 $0.50 $11 $15 $0.00 $0.00 Q3 2022 Q3 2023 YTD 2022 YTD 2023 Electric Gas Electric Gas Utilities Utilities Utiliti
Slide 7: Q3 2023 Earnings Drivers
Q3 2023 Earnings Drivers Change in Net Income Available for Common Stock Electric Natural Gas Interest Q3 2022 Margin 1, 2 Margin 1, 2 O&M DD&A Expense Other Taxes Q3 2023 (millions) $55 $6.4 New rates and rider $50 recovery ($0.7) ($0.8) ($1.3) $45.4 $45 $1.4 ($1.7) Recaptured lost revenue $7.1
Slide 8: YTD 2023 Earnings Drivers
YTD 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 $210 $21.0 New rates and rider ($2.7) recovery $200 ($7.3) Gain on sale of non-core ($2.0)
Slide 9: Strengthening Balance Sheet
Strengthening Balance Sheet YTD Progress from Robust Cash Flows, Capital Discipline and Financing Execution Recovery of elevated natural gas cost deferrals Strong operating New rates and rider recovery cash flows Customer growth Disciplined management of capital plan Capital investment Plann
Slide 10: Solid Financial Position
Solid Financial Position Committed to BBB+ Equivalent Credit Ratings Credit Ratings Liquidity and Cash Flow (millions) FFO S&P Moody’s Fitch $1,000 $250 million accordion feature Adjusted (with bank consent) FFO / Debt Leverage $750 BBB+ Baa2 BBB+ $750 million revolving credit facility $500 Target 1
Slide 11: Dividend Track Record
Dividend Track Record 53 Consecutive Years of Annual Increases and 81 Consecutive Years Paid $2.41 55%-65% long-term payout target 5.9% CAGR 2017-2022 Dividend growth rate in line with EPS* 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014 2018 2022 Annual Dividend Per Share * Future divid
Slide 12: Business Update
Business Update
Slide 13: Industry-leading Reliability
Industry-leading Reliability EEI 2022 Overall System SAIDI (Excluding Major Events) Black Hills’ Electric Utilities EEI Utilities BKH | 2023 Third Quarter Review | Nov. 2, 2023 | 13
Slide 14: Advancing Electric Resource Plans
Advancing Electric Resource Plans 500 Megawatts of Clean Energy Resources by 2029 Colorado Clean July 2023 - Issued RFP for 400 MW of 400 MW of clean energy resources Energy Plan renewable resources in service by 2029 in service between 2026 to 2029 80% by 2030 plan will achieve October 2023 bid dea
Slide 15: 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 to withstand stress events • Expand access to power markets and provide flexib
Slide 16: Wildfire Risk Mitigation
Wildfire Risk Mitigation Asset Integrity Operational • Wildfire risk mitigation has been a top Programs Programs Response priority for decades; embedded within safety culture and reliability goals • Vegetation management • Recent disclosure provides insight into • Transmission line inspection (5-yea
Slide 17: Regulatory, Growth and Strategy Update
Regulatory, Growth and Strategy Update
Slide 18: Rate Review Progress
Rate Review Progress • Settlement filed for Wyoming Gas rate review; expect decision by year-end • Natural gas rate review ongoing in Colorado; seeking new rates by Q1 2024 • Preparing to file a natural gas rate review in Arkansas by year-end Annual Filing Revenue Debt / Jurisdiction Date Increase R
Slide 19: Enhanced Strategic Objectives
Enhanced Strategic Objectives BKH | 2023 Third Quarter Review | Nov. 2, 2023 | 19
Slide 20: Disciplined Growth Plan with Upside
Disciplined Growth Plan with Upside Capital Incremental Other Earnings Investment Projects Drivers $3.5 billion 2023-2027 Infrastructure Development Pursuing Profitable Growth (millions) $900 $800 Electric generation and Data center, blockchain and $700 transmission projects technology growth $6
Slide 21: Customer-Focused Initiatives
Customer-Focused Initiatives Transmission Data Centers Blockchain Renewable Moving Energy and Storage Natural Gas Forward • Ready Wyoming • Attractive data center • New crypto-mining • 6 interconnects in • Advancing culture of electric transmission service territory in customer in service in service
Slide 22: 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 23: Strong Long-term Growth Outlook
Strong Long-term Growth Outlook $3.5 Capital Investment 2023-2027 billion 4% to 6% 55% to 65% Dividend payout target with • Incremental projects likely Long-term EPS growth target 1 long-term growth rate in line • Additional growth opportunities with EPS 2 • Integrated pure-play utility profile • Di
Slide 24: Questions
Questions
Slide 25: Appendix
Appendix
Slide 26: 2023 Earnings Guidance Assumptions
2023 Earnings Guidance Assumptions 2024 EPS guidance, 2024-2028 capital forecast and dividend update to be provided at Q4 earnings in February 2024 Black Hills reaffirmed its guidance for 2023 EPS available for common stock to be in the range of $3.65 to $3.85 based on the following assumptions, as
Slide 27: Income Statement
Income Statement ($ in millions) Third Quarter Year-to-Date 2022 2023 2022 2023 Revenue $ 462.6 $ 407.1 $ 1,760.4 $ 1,739.6 Fuel, purchased power and cost of natural gas sold (168.5) (102.2) (793.6) (749.8) Operations and maintenance expense (150.6) (142.2) (452.9) (462.4) Depreciation, depletion an
Slide 28: Capital Structure
Capital Structure ($ in millions) Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Capitalization Short-term Debt $ 501 $ 1,061 $ 525 $ 525 $ 1,125 Long-term Debt 4,131 3,607 3,954 3,956 3,800 Total Debt 4,632 4,668 4,479 4,481 4,925 Equity* 2,887 2,995 3,098 3,110 3,167 Total Capitalization $ 7,519 $ 7,663 $ 7,5
Slide 29: 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 weighted by customer count MWh Sales Total for all natural gas service areas weighted by customer count Dth Sales (in millions) (in millions) 1.8 1.9
Slide 30: 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 Q
Slide 31: Normalized EPS Seasonality
Normalized EPS Seasonality EPS, as adjusted* Q1 Q2 Q3 Q4 FY / YTD 2019* $1.73 $0.24 $0.44 $1.13 $3.53 EPS, as Adjusted, Normalized for Impacts of 2020* 2021 $1.59 $1.54 $0.33 $0.40 $0.58 $0.70 $1.23 $1.11 $3.73 $3.74 Weather, Mark-to-Market and Winter Storm Uri * 2022 $1.82 $0.52 $0.54 $1.11 $3.97 2
Slide 32: Winter Storm Uri Recovery Approved and Progressing
Winter Storm Uri Recovery Approved and Progressing ($ in millions) Winter Storm Uri Estimated Cost Recovery* Recovery Recovery Recovery Jurisdiction Amount * Period Completion (millions) $600 100% 120% 94% 99% Arkansas Gas $137.5 5 years Q2 2026 $500 84% $512 $543 $546 100% $400 66% $457 80% Colorad
Slide 33: 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 34: 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 35: Non-GAAP Financial Measures
Non-GAAP Financial Measures Earnings before Interest, Income Taxes, Depreciation and Amortization Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2022 2023 2022 2023 Net income $ 37.8 $ 48.8 $ 194.7 $ 192.7 Depreciation, depletion and amortization $ 64.0 $ 64.9 $ 188.6
Slide 36: 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 37: Vision, Mission and Company Values
Vision Be the energy partner of choice. Mission Improving life with energy. Company Values BKH | 2023 Third Quarter Review | Nov. 2, 2023 | 37
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