Black Hills (BKH) - 2024 Q1 - Quarterly Results

Financial and Operational Highlights The company reported strong Q1 2024 financial results driven by regulatory outcomes and expense management, alongside significant progress in clean energy and infrastructure investments Q1 2024 Financial Performance The company reported an 8% increase in diluted EPS to $1.87 for Q1 2024, driven by new rates, rider recovery, and lower operating expenses, offsetting weather impacts and prior year gains | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net income available for common stock | $127.9 million | $114.1 million | | Earnings per share, Diluted | $1.87 | $1.73 | - Financial results were positively impacted by new rates, rider recovery, and reduced operating expenses These factors offset negative impacts from 10% lower heating degree days, a prior year gain on the sale of non-core wind assets, and the issuance of new common shares[3] Management Commentary CEO Linn Evans highlighted a strong start to 2024, emphasizing that constructive regulatory outcomes and expense management more than offset challenges from weather and inflation. The company is advancing its clean energy plans, including 400 MW in Colorado, and sees future growth opportunities from increasing data center demand and its $4.3 billion five-year capital plan - The company is on track to meet its 2024 operational and financial goals, with strong performance driven by regulatory results and expense management[4] - Progress is being made on the regulatory front, with rate reviews advancing in Arkansas and Iowa, and a new filing planned for Colorado in June[2] - Strategic advancement in clean energy includes a proposal for 400 MW of wind, solar, and battery resources in Colorado and pursuing 100 MW of utility-owned renewables in South Dakota[5] - Future growth is expected from increasing load from data center and blockchain customers, supported by a $4.3 billion five-year capital plan focused on meeting demand, improving resiliency, and upgrading infrastructure[6] Key Operational Updates The company made significant progress across its utility segments, including advancing a 400 MW renewable energy plan in Colorado, filing for new rates in Iowa and Arkansas, and acquiring its first renewable natural gas (RNG) facility. Corporate actions included a dividend increase marking 54 consecutive years, issuance of common stock, and a credit rating affirmation from Fitch Electric Utilities The Electric Utilities segment advanced renewable energy plans in Colorado and South Dakota, experienced peak load growth in Wyoming, and continued transmission project construction - In Colorado, a plan was filed recommending 400 MW of new renewable resources (200 MW solar, 150 MW wind PPA, 50 MW battery) to be in service by 2026-2027, targeting an 89% GHG emission reduction by 2030[7] - Wyoming Electric set a new all-time peak load of 314 megawatts in January 2024, indicating growing demand[8] - In South Dakota, the company is pursuing 100 MW of utility-owned renewable generation to meet long-term growth needs, with a filing expected in H2 2024[9] - Construction continues on the 260-mile 'Ready Wyoming' electric transmission project, with completion expected in phases through 2024 and 2025[10] Gas Utilities The Gas Utilities segment progressed rate reviews in Iowa and Arkansas, implemented new rates in Colorado and Wyoming, and acquired its first renewable natural gas facility - Filed a rate review in Iowa on May 1, requesting $20.7 million in new annual revenue[11] - Advanced a rate review in Arkansas, requesting $44.1 million in new annual revenue, with new rates expected in Q4 2024[12] - Implemented new rates in Colorado and Wyoming, resulting from approved settlement agreements providing $20.2 million and $13.9 million in new annual revenue, respectively[13][14] - Acquired a renewable natural gas (RNG) production facility in Dubuque, Iowa, marking the company's first entry into RNG production[15] Corporate and Other Corporate actions included a 54th consecutive dividend increase, common stock issuance, and a credit rating affirmation from Fitch - The board approved a quarterly dividend of $0.65 per share, extending the track record to 54 consecutive years of dividend increases[16] - Issued 0.6 million shares of common stock for net proceeds of $33.8 million via its at-the-market (ATM) equity program[17] - Fitch Ratings affirmed the company's issuer default rating at BBB+ with a negative outlook[18] 2024 Earnings Guidance The company reaffirmed its 2024 earnings guidance, based on assumptions including normal weather, constructive regulatory outcomes, and planned equity issuances Guidance and Assumptions Black Hills Corp. reaffirmed its 2024 earnings guidance range of $3.80 to $4.00 per share. This forecast is based on several key assumptions, including normal weather conditions, constructive regulatory outcomes, no significant unplanned outages, and planned equity issuances of $170 million to $190 million | Metric | Guidance Range | | :--- | :--- | | 2024 Earnings Per Share | $3.80 - $4.00 | - Key assumptions for the guidance include: - Normal weather conditions - Constructive and timely regulatory outcomes - No significant unplanned generator outages - Equity issuance of $170 million to $190 million through the ATM program - Approximately $18 million in production tax credits[19] Consolidated Financial Results The company's Q1 2024 consolidated financial results show increased operating income and net income, driven by strong performance in both Electric and Gas utility segments Consolidated Income Statement For Q1 2024, the company's operating income rose to $193.3 million from $174.9 million in Q1 2023. Net income available for common stock increased to $127.9 million from $114.1 million year-over-year, driven by higher operating income in both Electric and Gas utility segments | (in millions) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Operating income: | | | | Electric Utilities | $64.6 | $61.1 | | Gas Utilities | $130.8 | $114.6 | | Corporate and Other | $(2.1) | $(0.8) | | Total Operating income | $193.3 | $174.9 | | Interest expense, net | $(44.0) | $(43.5) | | Income tax expense | $(16.9) | $(14.7) | | Net income available for common stock | $127.9 | $114.1 | | Per Share Data | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Earnings Per Share, Basic | $1.88 | $1.73 | | Earnings Per Share, Diluted | $1.87 | $1.73 | Segment Performance Summary Both Electric and Gas Utilities segments reported increased operating income for Q1 2024. The Electric segment's growth to $64.6 million was driven by new rates and rider recovery. The Gas segment's operating income grew significantly to $130.8 million, benefiting from new rates and lower operating expenses, which more than offset the negative impact of warmer weather Electric Utilities Segment The Electric Utilities segment reported increased revenue, margin, and operating income, primarily due to new rates and rider recovery | Electric Utilities (in millions) | Q1 2024 | Q1 2023 | Variance | | :--- | :--- | :--- | :--- | | Revenue | $222.2 | $218.7 | $3.5 | | Electric Utility margin (non-GAAP) | $167.4 | $163.3 | $4.1 | | Operating income | $64.6 | $61.1 | $3.5 | - The $4.1 million increase in Electric Utility margin was primarily driven by $8.8 million from new rates and rider recovery, partially offset by a $1.2 million negative impact from weather[42] - Operations and maintenance expense was flat year-over-year, as lower outside services and employee costs were offset by a one-time $7.7 million gain on an asset sale in the prior year[36] Gas Utilities Segment The Gas Utilities segment saw significant growth in operating income and margin, driven by new rates and reduced operating expenses despite weather impacts | Gas Utilities (in millions) | Q1 2024 | Q1 2023 | Variance | | :--- | :--- | :--- | :--- | | Revenue | $508.7 | $706.9 | $(198.2) | | Gas Utility margin (non-GAAP) | $246.8 | $235.9 | $10.9 | | Operating income | $130.8 | $114.6 | $16.2 | - The $10.9 million increase in Gas Utility margin was driven by $13.1 million from new rates and rider recovery, which more than offset a $7.4 million negative impact from weather[46] - Operations and maintenance expense decreased by $8.5 million, primarily due to lower employee-related expenses ($5.3 million) and lower bad debt expense ($1.6 million)[46] Corporate and Other Segment The Corporate and Other segment reported an increased operating loss for the quarter | Corporate and Other (in millions) | Q1 2024 | Q1 2023 | Variance | | :--- | :--- | :--- | :--- | | Operating (loss) | $(2.1) | $(0.8) | $(1.3) | Other Financial Items Interest expense remained stable year-over-year, while other income shifted to a slight expense. Income tax expense increased to $16.9 million, primarily due to higher pre-tax income, with the effective tax rate remaining comparable to the prior year | (in millions) | Q1 2024 | Q1 2023 | Variance | | :--- | :--- | :--- | :--- | | Interest expense, net | $(44.0) | $(43.5) | $(0.5) | | Other income (expense), net | $(0.8) | $0.7 | $(1.5) | | Income tax (expense) | $(16.9) | $(14.7) | $(2.2) | - The increase in income tax expense was primarily due to higher pre-tax income, while the effective tax rate was comparable to the prior year period[56] Investor Information The company will host a Q1 2024 earnings conference call and attend the AGA Financial Forum to engage with investors Conference Call and Webcast The company will host a conference call and webcast on May 9, 2024, at 11 a.m. EDT to discuss its Q1 2024 financial and operating performance. Materials and access details are available on the company's investor relations website - A live conference call and webcast to discuss financial and operating performance is scheduled for 11 a.m. EDT on Thursday, May 9, 2024[21] - Access to the webcast, investor presentation, and replay will be available through the Investor Relations section of the company's website[22] AGA Financial Forum Attendance Senior leadership will meet with investors at the 2024 AGA Financial Forum from May 19-21 to discuss guidance, growth targets, and other business factors. Presentation materials will be available online - Senior leadership is scheduled to meet with investors during the 2024 AGA Financial Forum on May 19-21[24] - Conference materials will be made available on the company's Investor Relations website prior to the meetings[25]