Black Hills Corporation · NYSE:BKH
Black Hills — Q1 2024 Earnings Presentation
36 slides from Black Hills's earnings presentation, May 9, 2024
Slide 1: Resilient. Reliable. Ready. 2024 First Quarter Review
RESILIENT. RELIABLE. READY. 2024 First Quarter Review May 9, 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 First Quarter Review | May 9, 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: 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 6: Q1 2024 Financial Review
Q1 2024 Financial Review Slt
Slide 7: Q1 2024 EPS Earnings Drivers
Q1 2024 EPS Earnings Drivers New Margin and Cost Management More Than Offset Weather, Financing and Other Impacts New Q1 2023 Margin O&M MTM Weather Financing DD&A Other Q1 2024 $2.20 $0.04 $2.10 $0.09 $2.00 $0.25 ($0.10) +8% $1.90 ($0.07) $1.87 ($0.05) ($0.02) $1.80 $1.73 $1.70 $1.60 $1.50 $1.40 $1
Slide 8: 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 $750 (with bank consent) Adjusted FFO / Debt Leverage Baa2 BBB+ BBB+ $750 million revolving credit facility $500 Stable o
Slide 9: 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 10: Business Update
Business Update
Slide 11: Operational Excellence
Operational Excellence Delivering Safe, Reliable and Cost-Effective Energy Dependable Natural Gas Service 2023 AGA Industry Leader In mid-January, we reliably served our customers during in Accident Prevention subzero conditions across our service territory Black Hills was recognized as a leader in
Slide 12: 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 13: Colorado Clean Energy Plan
Colorado Clean Energy Plan ~400 MW of Renewable Resources to Reduce Emissions 80% by 2030* ✓ April 2023 – 80% by 2030 Clean Energy Plan approved by Preferred Portfolio** unanimous settlement 200 MW solar build-transfer (utility owned) ✓ Mid-2023 – Issued RFP for 400 MW 50 MW battery storage build-tr
Slide 14: South Dakota Integrated Resource Plan
South Dakota Integrated Resource Plan 100 MW of Utility-Owned Resources by Mid-2026 ✓ 2023 – Submitted Integrated ✓ Next Milestones: Resource Plan ✓ Q1 2023 – Issued RFP ✓ 2024 ✓ Mid-2026 ✓ File CPCN with ✓ Place 100 MW of Wyoming PSC resources in service ✓ Q1 2024 – Added estimated investment to ca
Slide 15: Wildfire Risk Mitigation
Wildfire Risk Mitigation • Wildfire risk mitigation has been a top Asset Integrity Operational priority for decades; embedded within Programs Programs Response safety culture and reliability goals • Vegetation management • Publishing comprehensive Wildfire • Transmission line inspection and Distribu
Slide 16: Regulatory, Growth and Strategy Update
Regulatory, Growth and Strategy Update
Slide 17: Rate Review Progress
Rate Review Progress • Implemented new rates for Colorado Gas and Wyoming Gas in February • Advanced Arkansas Gas rate review • Filed rate review for Iowa Gas • Preparing to file rate review for Colorado Electric in June Annual Filing Revenue New Rates Jurisdiction Date Increase ROE Debt / Equity Ef
Slide 18: 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 19: 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 Electric Gas Focused on Primarily rider Utilities Diverse mix of Utilities
Slide 20: Serving Customer Needs Cost-Effectively
Serving Customer Needs Cost-Effectively Transmission Data Centers and Renewable Business Process Electric Generation Natural Gas Transformation and Storage Blockchain • ~5% EPS contribution; • 10 interconnects to • Identify and deliver • South Dakota: 100 • Ready Wyoming 10%+ by 2028 be in service b
Slide 21: 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 22: Questions
Questions
Slide 23: Appendix
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Slide 24: 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 25: 2024 Earnings Guidance Assumptions
2024 Earnings Guidance Assumptions Black Hills reaffirmed its guidance for 2024 EPS available for common stock to be in the range of $3.80 to $4.00 based on the following assumptions: • Normal weather conditions within our utility service territories including temperatures, precipitation levels and
Slide 26: Capital Structure
Capital Structure ($ in millions) Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Capitalization Short-term Debt $ 525 $ 525 $ 1,125 $ 600 $ 600 Long-term Debt 3,954 3,956 3,800 3,801 3,803 Total Debt 4,479 4,481 4,925 4,401 4,403 Equity* 3,098 3,110 3,167 3,215 3,334 Total Capitalization $ 7,577 $ 7,591 $ 8,092
Slide 27: Normalized EPS Seasonality
Normalized EPS Seasonality EPS, as adjusted* 2019* Q1 $1.73 Q2 $0.24 Q3 $0.44 Q4 $1.13 FY / YTD $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 20
Slide 28: Utility Weather and Demand
Utility Weather and Demand Weather Impact Compared to Normal (EPS) Degree Days Q1 Q2 Q3 Q4 2020 2021 2022 2023 2024 Gas HDD 2,865 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2024 $0.10 $0.10 Electric HDD 2,820 Actual Electric CDD - $0.07 $0.07 Gas HDD -8% 2024 vs $0.06 $0.05 Electric HDD -7%
Slide 29: 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 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
Slide 31: 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 32: 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 33: Non-GAAP Financial Measures
Non-GAAP Financial Measures Earnings before Interest, Income Taxes, Depreciation and Amortization Three Months Ended March 31, (in millions) 2023 2024 Net income $ 117.4 $ 131.6 Depreciation, depletion and amortization 61.6 65.9 Interest expense, net 43.5 44.0 Income tax expense (benefit) 14.7 16.9
Slide 34: Non-GAAP Financial Measures
Non-GAAP Financial Measures Earnings, as adjusted (in millions) Earnings Per Share, as adjusted Q1 Q1 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 $127.9 $ 3.28 $ 3.65 $ 3.74 $ 3.97 $ 3.91 $ 1.87 (GAAP) Adjustmen
Slide 35: Vision, Mission and Company Values
Vision Be the energy partner of choice. Mission Improving life with energy. Company Values BKH | 2024 First Quarter Review | May 9, 2024 | 35
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