Black Hills (US:BKH)2025-11-06 17:00Financial Data and Key Metrics Changes - For Q3 2025, the company reported GAAP EPS of $0.34, including $0.10 of merger-related costs, resulting in an adjusted EPS of $0.45 compared to $0.35 for Q3 2024, reflecting a year-over-year increase [10][11] - Year-to-date EPS was reported at $2.58, including $0.11 of merger-related costs, leading to an adjusted EPS of $2.68, a 6.3% increase from $2.52 in the same period last year [12][14] - The company reaffirmed its 2025 earnings guidance with an adjusted EPS range of $4-$4.20, indicating a 5% growth rate at the midpoint over 2024 EPS [6][15] Business Line Data and Key Metrics Changes - Regulatory efforts contributed $0.21 per share of new rates and rider recovery margin for Q3 2025, offsetting unfavorable weather and increased operating costs [10][11] - Customer growth, particularly from large load customers like data centers, is positively impacting earnings, with ongoing negotiations for over 3 gigawatts of demand [6][18] Market Data and Key Metrics Changes - The company is experiencing strong economic conditions in its service territories, with no significant indicators of weakness noted [32] - The merger with Northwestern Energy is expected to enhance competitive positioning and create additional value for customers and shareholders [9] Company Strategy and Development Direction - The company is executing a $1 billion capital plan to support key projects and has made significant progress on regulatory and growth initiatives [4][5] - The merger with Northwestern Energy is anticipated to be finalized in the second half of next year, which will provide increased scale and new opportunities [9][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving long-term growth targets, supported by a $4.7 billion capital plan and strong customer demand [7][15] - The company is on track to complete major projects, including the Ready Wyoming transmission expansion and the Lang 2 generation project, which are expected to enhance service reliability and support growth [20][21] Other Important Information - The company has maintained a healthy balance sheet with a net debt to total capitalization target of 55% and a strong liquidity position [14] - The company has a long-standing commitment to dividends, targeting a payout ratio of 55%-65% [16] Q&A Session Summary Question: Data center resource requirements and equipment reservations - Management confirmed they have reservations in place and are utilizing a flexible service model to meet growing demand [26][27] Question: Concerns about the approval process in Montana - Management is closely monitoring the situation and remains optimistic about the approval process [29] Question: Fourth-quarter issues that might impact guidance - Management indicated no significant operational or financial issues, with weather being the primary concern [30][31] Question: Indicators of economic weakness in service areas - Management reported no signs of weakness in their service territories, with conditions remaining strong [32] Question: EPS upside from data center projects - Management acknowledged the potential for significant EPS growth from data centers, but emphasized the variability in contractual agreements [40][41] Question: Strategic considerations for coal mine assets - Management is keeping options open regarding the coal mine, aware of potential rare earth minerals but not expecting significant monetization in the near term [45]