Black Hills (US:BKH)2023-08-03 21:56Financial Data and Key Metrics Changes - The company reported earnings per share (EPS) of $0.35 for Q2 2023, down from $0.52 in the same period last year, primarily due to higher operating expenses and increased interest expense [20][21][22] - Operating and maintenance (O&M) expenses increased by 8.2% year-over-year, driven by inflationary impacts on labor costs and benefits [22] - The company improved its net debt to total capitalization by 250 basis points to 58.2% [25] Business Line Data and Key Metrics Changes - Higher utility margins contributed $0.09 of EPS from new rates and investment riders, and $0.04 from transmission services and off-system energy sales [21] - The company is executing on its electric resource plans in Colorado and South Dakota, aiming to add a combined 500 megawatts of renewable resources [27][34] Market Data and Key Metrics Changes - The company is experiencing strong customer growth in service territories, particularly in Northwest Arkansas and the Front Range of Colorado [82] - The company is actively pursuing renewable natural gas (RNG) projects, with six interconnects already in service and three more nearing completion [47] Company Strategy and Development Direction - The company aims to achieve net zero emissions by 2035 for its natural gas systems and reduce electric emissions by 70% by 2040 [48][49] - The capital forecast for 2024 is projected to exceed $800 million, driven by strategic project deferrals and ongoing investments in infrastructure [41][99] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the midrange of EPS guidance despite inflationary pressures and higher O&M costs [55][60] - The company is focused on managing controllable expenses and leveraging strong cash flows from operations to support its financial objectives [58][66] Other Important Information - The company plans to issue $140 million to $160 million of equity through its ATM program and has improved liquidity by paying down short-term debt [23][30] - The company is in the execution phase of its regulatory plan, with two natural gas rate reviews in progress [40] Q&A Session Summary Question: What are the expectations for 2024? - Management indicated that inflationary challenges are impacting guidance, but they are focused on managing controllable O&M costs to achieve midrange guidance for 2023 [55][56] Question: What is prompting the rate case filing in Arkansas? - The rate case is driven by significant investments in growing communities in Northwest Arkansas, with expected rates effective around the same time next year [76] Question: How is the company approaching investments in RNG and regulated-like businesses? - The company is exploring opportunities in RNG interconnects while primarily focusing on regulated assets, with a dedicated team evaluating potential investments [77]