Black Hills (US:BKH)2024-11-07 21:03Financial Data and Key Metrics Changes - The company reported earnings per share (EPS) of $0.35 for Q3 2024, down from $0.67 in Q3 2023, primarily due to higher operating expenses and unplanned generation outages [21][22] - Year-to-date EPS grew 4% compared to the same period last year, excluding prior year one-time events [28] Business Line Data and Key Metrics Changes - New margins contributed $0.16 per share, with $0.10 from electric utilities and $0.05 from gas utilities, offset by unplanned generation outages and lower off-system sales [22][24] - Operating and maintenance (O&M) expenses increased by $0.23 per share, driven by higher insurance premiums and costs associated with unplanned outages [23] Market Data and Key Metrics Changes - The company is on track to deliver on its earnings guidance range of $3.80 to $4 per share for the year, despite challenges from mild weather and increased insurance expenses [14][20] - The company anticipates that earnings from data center customers will grow from 5% of total EPS in 2023 to over 10% by 2028 [18][63] Company Strategy and Development Direction - The company is focused on a customer-centric strategy, emphasizing reliability and safety in energy delivery, and is advancing regulatory and growth initiatives [7][12] - A capital investment plan of $4.3 billion over five years is in place, with $800 million planned for 2024, aimed at enhancing energy infrastructure and customer service [11][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving long-term EPS growth targets of 4% to 6%, supported by strong growth opportunities and effective execution of initiatives [15][20] - The company is actively pursuing regulatory approvals for new rates and has successfully implemented new customer rates in Arkansas [13][34] Other Important Information - The company has maintained a strong financial position, achieving a net debt to capitalization target of 55% and a BBB+ credit rating [12][29] - The company has a 54-year track record of increasing dividends, which is a key component of its long-term value strategy for shareholders [31] Q&A Session Summary Question: Details on unplanned outages and O&M impact - Management explained that unplanned outages were due to component failures, with a financial impact of $0.03 and $0.05 for the quarter and year, respectively [44][46] Question: Guidance for the year - Management reiterated the earnings guidance range but did not specify where they might be trending within that range [47] Question: Impact of incoming administration on crypto and blockchain - Management stated that their strategy is customer-focused and agnostic to federal policy, but they see potential benefits from serving data centers [49][50] Question: Cadence of new loads from large customers - Management indicated that they have a good understanding of their anchor tenants' growth patterns and expect gradual increases in load from data centers [52][52] Question: O&M management and fourth-quarter expectations - Management highlighted their focus on managing O&M costs effectively to cover unexpected challenges and maintain guidance for earnings growth [56][58] Question: Future data center growth opportunities - Management confirmed that growth in data center contributions to EPS is primarily driven by existing anchor tenants, with additional opportunities being explored [63][64]