Black Hills (BKH) - 2025 Q2 - Quarterly Report

Forward-Looking Information This report contains forward-looking statements based on current expectations, and actual results may differ - This report contains forward-looking statements based on current expectations and projections; actual results may differ due to various risks and uncertainties[13] - Key risks include the ability to obtain adequate cost recovery, complete capital programs, execute strategy and financing plans, effects of interest rates and inflation, and impacts of governmental regulation and supply chain disruptions[15] PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) This section presents the unaudited consolidated financial statements for the quarterly period ended June 30, 2025 Consolidated Statements of Income The company reported increased revenue and net income for the three and six months ended June 30, 2025 Consolidated Income Statement Highlights (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $439.0 | $402.6 | $1,244.2 | $1,129.0 | | Operating Income | $82.5 | $70.6 | $287.4 | $264.0 | | Net Income Available for Common Stock | $27.5 | $22.8 | $161.7 | $150.6 | | Diluted EPS | $0.38 | $0.33 | $2.24 | $2.19 | Consolidated Balance Sheets Total assets and equity increased as of June 30, 2025, driven by PP&E growth and retained earnings Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $608.4 | $742.3 | | Total Property, Plant and Equipment, net | $7,860.4 | $7,629.9 | | TOTAL ASSETS | $10,091.6 | $10,022.6 | | Total Current Liabilities | $953.9 | $763.4 | | Long-term Debt, net | $3,952.4 | $4,250.2 | | Total Equity | $3,719.4 | $3,585.2 | | TOTAL LIABILITIES AND TOTAL EQUITY | $10,091.6 | $10,022.6 | Consolidated Statements of Cash Flows Operating cash flow decreased while investing cash use increased for the six months ended June 30, 2025 Six Months Ended June 30, Cash Flow Summary (in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $416.4 | $464.0 | | Net Cash used in Investing Activities | $(376.2) | $(340.7) | | Net Cash provided by (used in) Financing Activities | $(47.8) | $415.4 | | Net Change in Cash | $(7.6) | $538.7 | Note 2. Regulatory Matters The company secured several favorable rate case decisions and has a new rate review pending in Nebraska - Colorado Electric received a final decision for a general rate increase, resulting in approximately $17.5 million of new annual revenue, effective March 22, 2025[39] - Iowa Gas received final approval for a settlement agreement generating $15.0 million in new annual revenue, with new rates effective January 1, 2025[40] - Kansas Gas received approval for a settlement generating $10.8 million in new annual revenue, effective August 1, 2025[41] - Nebraska Gas filed a rate review requesting $34.9 million in new annual revenue, with a decision expected in Q1 2026[42] Note 5. Financing The company extended its credit facility, maintained covenant compliance, and utilized its ATM equity program - The maturity of the $750 million Revolving Credit Facility was extended to May 31, 2030; as of June 30, 2025, available capacity was $622.8 million[50] - The company was in compliance with its key financial covenant, with a Consolidated Indebtedness to Capitalization Ratio of 0.55 to 1.00, below the maximum of 0.65 to 1.00[52] - On May 8, 2025, the At-the-Market (ATM) equity program was amended, resetting its size to $400 million; the company raised $65.3 million (net) through the ATM programs in the first six months of 2025[54][55] Note 11. Income Taxes The company sold Production Tax Credits and is evaluating the impact of newly enacted energy legislation - In January 2025, the company sold $17.0 million of 2024-generated Production Tax Credits (PTCs) to a third party under the IRA's transferability provision[91] - The 'One Big Beautiful Bill Act' (OBBBA) was signed into law on July 4, 2025; while it rolls back some clean energy provisions, it does not repeal tax credit transferability and the company is evaluating its impact[93] Note 12. Business Segment Information The Gas Utilities segment drove operating income growth, while capital expenditures were led by Electric Utilities Operating Income by Segment - Six Months Ended June 30 (in millions) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | Electric Utilities | $103.3 | $110.9 | | Gas Utilities | $187.0 | $153.7 | | Corporate and Other | $(2.9) | $(0.6) | | Total Operating Income | $287.4 | $264.0 | Capital Expenditures by Segment - Six Months Ended June 30 (in millions) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | Electric Utilities | $211.8 | $185.6 | | Gas Utilities | $153.8 | $190.4 | | Corporate and Other | $4.3 | $4.8 | | Total Capital Expenditures | $369.9 | $380.8 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial results, strategic projects, liquidity, and capital expenditure plans Recent Developments Key developments include new energy legislation, wildfire mitigation efforts, and ongoing strategic projects - Wyoming enacted wildfire mitigation legislation providing liability protections for utilities with approved plans; the company plans to file its plan in H2 2025[114] - Wyoming Electric set four new all-time peak loads in H1 2025, reaching 379 MW on June 20, 2025, up from a previous peak of 314 MW[114] - The Ready Wyoming transmission project is on track for completion by year-end 2025[120] Results of Operations Consolidated operating income increased, driven by strong performance in the Gas Utilities segment Consolidated Operating Income Variance (in millions) | Segment | Q2 2025 vs 2024 | YTD 2025 vs 2024 | | :--- | :--- | :--- | | Electric Utilities | $2.7 | $(7.6) | | Gas Utilities | $12.5 | $33.3 | | Corporate and Other | $(3.3) | $(2.3) | | Total Operating Income | $11.9 | $23.4 | - The increase in Gas Utilities' operating income was primarily due to new rates from rate reviews and favorable weather[122] - The decrease in Electric Utilities' year-to-date operating income was due to higher operating expenses and unplanned generation outages, which offset gains from new rates[122] Liquidity and Capital Resources The company maintained strong liquidity and a stable capital structure while funding its capital expenditure plan Liquidity and Capital Structure (in millions) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Available Liquidity | $630.9 | $628.8 | | Total Debt | $4,376.1 | $4,384.0 | | Total Stockholders' Equity | $3,636.1 | $3,501.5 | | Debt to Capitalization | 54.6% | 55.6% | Forecasted Capital Expenditures (in millions) | Year | 2025 | 2026 | 2027 | 2028 | 2029 | | :--- | :--- | :--- | :--- | :--- | :--- | | Forecast | $1,002 | $859 | $822 | $1,089 | $909 | - Credit ratings were affirmed by S&P at BBB+ (Stable) and Moody's at Baa2 (Stable)[167] Item 3. Quantitative and Qualitative Disclosures About Market Risk There were no material changes to the company's previously disclosed market risk factors - There have been no material changes to market risk disclosures from the 2024 Annual Report on Form 10-K[177] Item 4. Controls and Procedures The company's disclosure controls and procedures were deemed effective with no material changes in internal controls - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025[178] - No material changes to internal controls over financial reporting occurred during the quarter ended June 30, 2025[180] PART II. OTHER INFORMATION Item 1. Legal Proceedings A key lawsuit was resolved in the company's favor without material financial impact - On May 12, 2025, a jury returned a verdict in favor of BHC and its subsidiaries in the GT Resources, LLC lawsuit, resolving the matter without material impact on the company's financial position[46] Item 1A. Risk Factors There were no material changes to previously disclosed risk factors - There are no material changes to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K[182] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company acquired a small number of shares to cover tax obligations from vested equity awards - A total of 747 shares were acquired during the quarter for tax withholding purposes related to equity compensation plans[183] Item 4. Mine Safety Disclosures Mine safety violation information is provided in Exhibit 95 of this report - Mine safety disclosure information is included in Exhibit 95[184] Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[185] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including certifications and XBRL data