BKH - Earnings call transcript Q1 2019 | Black Hills Corporation

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Operator

Good day, ladies and gentlemen and welcome to the Black Hills Corporation First Quarter 2019 Earnings Conference Call. My name is Brian and I will be your coordinator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to Mr. Jerome Nichols, Director of Investor Relations of Black Hills Corporation. sir. proceed, Please

Jerome Nichols

Executive Good first Brian. quarterly Welcome Black Financial and to discussion Vice Kinzley, Thank and President XXXX morning, earnings Corporation’s Chief Chief President Evans, quarter are our and conference Hills Rich today Senior you, Officer. Linn everyone. Officer call. earnings Leading

in like Before American Forum Financial Gas would that Fort Florida. Hills to XXst Lauderdale, begin we we will Black Association starting note today, be the May attending

webcast and will a under presentation and on leadership website be Our be our materials posted will making the the Investor information at www.blackhillscorp.com Relations heading.

comments. today, of are forward-looking there Securities discussion earnings our may by Exchange make and comments a contain number During as the defined some such the of and we uncertainties Commission statements in inherent

with and our Form earnings on Slide filed materially from Exchange investor Although factors now based may our future Evans. differ to XX-Q our some our are website results to Commission results actual over that the expectations. could Form recent believe I the call on release, to materially. XX-K assumptions, of list the that turn We our you will of and and presentation differ expectations Linn a cause for beliefs X of direct reasonable and the we most Securities

Linn Evans

then everyone Thank will with Rich finish quarter, joining us. financial you, then I our you I’ll thank highlights around provide morning, Jerome. the and of Starting update, will Good for and the on cover strategy. Slide a discussion X,

of would of presentation X, to this I substance morning, before I couple to a Slide like the speak the to note Moving items.

our this incorporated annual report year. that year for theme ready, was theme our and this we presentation into Our

initiative how seeing ready and enhance the how this for we our to customers started we our advertising requires investors, with. everything for ready will see earlier branding we our can to we improving being that same business through you, materials. investor In constant and customers in You evolution ready be do, easy around messaging way, present do year. Being that our are are improving

be current on more investor the our forward, more results information. presentation earnings current presentations will while Going and more our forward-looking will include strategy initiatives, focused and quarter’s

where these forward-looking of our some changes long-term This slides in AGA reference These will excluded investor events the or this in included will changes in presentation, that in note such discussed. we upcoming slides. have signal anyway operations, You Jerome our decks for however. does not as our strategy be

we an quarter X, Slide financially. to had excellent Moving operationally from and

– during team, our exceptionally team key zero system top delivered performed growth winter our delivering our to strong We how and I’m energy reliable and We and and the needs, Safety for were we our all severe response in earnings is priority our in well difficult most. Our during proud sustaining conditions. conditions they needed first injuries customers’ operations customers’ our the it safe our systems the weather when performed needs. of quarterly do, advanced teams strategic service quarter, initiatives. with ready during

customers infrastructure and our the many we winter Iowa to the focus Colorado, in in cyclone community delivered reliability its outages and the in in bomb cases, and and mile-per-hour cold we Homer, and safety investments Because winter severe our January and systems, team proactively resulting flooding during our avoided these then associated our XXX the during Nebraska. of on by reduced, vortex, produced keep conditions. in upgrading temperatures Our nearly the storm, winds and energy record-breaking with safe polar

flooding we difficult in Nebraska, and deliver energy both National Appreciation brave Mechanic April Our maintain essential not on recover and our women to systems basis. for be head worst XX committed which a proactive upon. the during more and daily loss to on often approach to conditions extensive a enhances proud the of These and and weather was help resilient our was who energy communities of Day, more quickly affected employees men depend many. our customers Line communities time begin Iowa could widespread customers

line $XXX delivered perfect our personally zero primary fact, mechanic capital customer-focused In currently and them team delivering long-term primarily investment in colder-than-normal to first growth additional I our quarter, We further confidence and Strategically, of growth due drivers. benefit added our to their We capital weather expectations. in were safety safety X-year weather of in in identified earnings during our investment guidance our we plan. service quarter. record to to thank the a and to customer opportunities, year-to-date. our capital customers. injuries increased XXXX has the with XXXX investments forecast, million returns the for continued commitment an investments valued our We excellent refine those providing

our X proceedings. advance filings key scale electric submitted winter announced utilities. Slide with our government, and We progress regulatory a program We our renewable South new starting Wyoming capital Ready lists energy. the commercial In in customers larger quarter, cost-effective Dakota industrial accomplishments and provide also specific to our option severe our Renewable continued to to for we weather. December, and projects purchase despite made on utility

to process support approval a system. tariff delivering are Project on also to of In to Corriedale blockchain Wyoming tariff this September call recruit XX-mile XX-megawatt the help both continue last Stegall, we’re will the blockchain tariffs Two additional the year. were these am third year, growth We Dakota seeking to from Nebraska. in to placed pleased million Wyoming. midst South construction that span to extending our their we interest fall. transmission budget requested voluntary to I for the City, in approval XXX-mile project new demand from previously segment program. on for and segments The program. in strong construct the July The support of continued service Energy to customers remains XX companies energy home, our this on In final of November in report service miles to last place $XX in this Rapid and Wind regulatory track and line, Dakota, we receive South potential and

earlier hearing this April tariff. XX, Commission has the a approved Wyoming the Following on week,

to natural on Slide utilities hand in Colorado Moving utilities consolidate rates, X, that state. gas and review services in side the X, of to rate tariffs February our filed gas the the on a we X of right

Our Colorado the December. consolidation completed filing a seeks rider and to new for received last gas October approval integrity investments. rate the consolidation review We last also recover legal mechanism

On on our for Power our utilities fall, X our in natural plan Wyoming. X to gas have placed segment, in rate Nebraska energy scheduled Colorado consolidated application track in we we farm a a the the deliver June. in XXXX, increase, renewable Hills near March, utilities approval Colorado, purchase Colorado to rate Pueblo, XX, consecutive will combined and its This one reviews to of in natural proud this legal of XXXX. construction $XX process its industry per as in Similar the longest pending all and in renewable purchase requirement under wind energy will energy XX-megawatt Busch consolidation the annual we declared million an XX% a is of commenced Black record We following fulfill service the agreement. in file applications and dividend Board to March dividend of hearing Colorado. to quarterly review filed completion consolidation the request. the of $X.XX In $X.XXX April we on the of. customers represents farm by our XX-year deliver the year the of Ranch When records annualized and a are share, Generation of Electric XXth At which II extremely utility our gas rate of Electric, utility power – wind a affiliate,

serving under you, had first approximately our progress and shareholders, quarter strategy. issued shares offering net our we our recap, growth for customer-focused equity of great the To approximately customers, XXX,XXX delivering for a long-term utility making we $XX at-the-market the on Finally, proceeds million. during quarter

Rich turn update. financial I for Rich? Now, over will to our it

Rich Kinzley

chest morning for Please on a I me, I quite and to can the Linn with I’m moment. step Thanks, from bear microphone Slide hope, X. Alright. so clean. fighting this through I everyone. will have away good get a I cold, but start

made quarter of the noted, Utilities Linn gas favorable benefit at first weather Returns financial big our performance. year-over-year on QX delivered customers drivers Gas and natural to our solid the at investments As strong we were and financial results. utilities electric

as increased XXXX. share Our November quarterly increased from related EPS, unit adjusted, of last conversion X% despite equity XX% year-over-year, dilution the to back count

EPS first $X.XX strong we share. quarter, XXXX end our each by $X.XX increased range As to of $X.XX of the per on guidance a to our result

better the in that adjusted, of ongoing special XX, special earnings on items. not earnings related. were displays appendix. months assumptions and isolate guidance items $X.XX did GAAP last guidance income We our $X.XX earnings slides the XXXX, a of This and XX XXXX. Slide X communicate represent trailing non-GAAP had tax XXXX, XX In earnings of do slide no also in to XXXX measure. special as and March to XXXX, of our XX we EPS related to which We X, as this reaffirmed quarters we all detailed We QX to were experienced our performance. reconciled items ongoing reflective performance, per On and share. The range

throughout the reflected Tax Jobs of impact Act The first the item the and Cuts year.

benefits of legal item completed The XXXX. related second larger tax restructurings and to in

basis. in simplify to legal structure restructurings we QX for in SourceGas acquired of and $XX restructured quarter. The that is effort our the acquisition. million accordingly, As quarter part QX are purposes, as-adjusted amortizable deferred a resulting the them year, our entities tax of These last an goodwill part reflect as an items in the and performance million of in certain tax a indicative not increased and we then on deferred first $XX ongoing tax benefit benefit fourth

the XXXX, $X.XX EPS year. Our last first as first compared $X.XX quarter for quarter adjusted, to was

to items normal QX to XXXX. winter EPS comparisons. driven As enjoy will our slide. of XXXX Also, segment positively But year, operating weather to earnings improve QX excluding to year-over-year this transparency approximately on investments over the on strong just investor year our already next winter positively this estimate compared our in delivered effective rate I to this as of I’ll QX services, XXXX year last customer and heating materials year, QX year, by positive compared to by last was expenses are This chart returns Slide illustrates primarily income XXXX by $X.XX. and to XXXX related to I slide uplift Linn is overall, tax QX XXXX colder colder amounts lower by from to EPS were on a add the Total We added and we increase XXXX. year weather All higher on the year, to XX of noted, mentioned. that we that a normal, estimate taxes. slide. compared last debt The utilities special expense outside waterfall a costs, this results chart by impacted we net an I next further detail expect last discuss drivers QX more season. with the the driven impacted compared X% employee compared depreciation. X% primarily margins, higher QX bad gross primary $X.XX.

We prior effective rate year. income XXXX the also in favorability experienced compared QX our in tax to

effective XX% compared year items. special last to prior is XX% approximately excluding year when Our this approximately the tax be rate year expected to

operating increased Linn effective large and wind service Forecasted drive required related Partially the credits reform, deferred the an margin cost. customers to tax QX related principles the amortization higher by $X.X amortization gross $X.X are find growth from were service we high-level of to income to tax federal million operating Slide QX from Electric nearly margins an accounting first marketing gross higher increase and in purchase forecasted fall margin combining credits margins which earning Customer our excess in transport Gas interim and million comments increase well XXXX, Gas million, accepted primarily that XXXX our Depreciation we in a X%. XXXX $XX.X QX Electric At to compared over for the added contributed $X.X few Under also for million, portion favorable QX, income million Gross increased increase farm, costs. primarily volumes Utilities. power income state we in mentioned, our X%. offsetting year-over-year half outside and plant increased Utilities, and annual increase. QX additional gross At $X you operating our a increased the of operating charges, results Gross to increased income strong tax service. II rate. credits federal higher Ranch improved operating tax increase tax to due and our here, margins slide. reduction year-over-year and Utilities, for to segments changes $X.X XX slide in due primarily placed from and income $X.X tax services the grew of and million, I’ll expenses, release. in deferred transmission earnings as given higher quarter. excess one make this outside which investments presentation, higher details from renewable the our in improved at offsetting year, income can XXXX margin the as and annual primarily have tax capacity our by on QX off-system to anticipate million onto all accounting, operating returns performance by QX is XXXX, Operating territories on Partially to gross weather. recognize compared expenses, investment we increased and generally power higher to in related colder employee over employee over were production rate-based higher as of services Busch that XXXX weather. in new energy operating our a for the last tax expenses lower

provide to financial returns. of Slide of and consistent through capital On efficiently results. and you’ll shows the see continue lens Slide businesses our mining QX Generation bottom and segments position structure, our excellent operate XX financial delivered Power Both coal ratings credit the year-over-year XX, flexibility.

Our strong capitalization in as solid our ratings to well year-end. to ratings. us due by and debt a earnings, equity decrease XX, a Fitch retained March This XX.X%, of agencies. BBB+ Moody’s, points at program, ratio allowed flows $XX reduce our our and from debt reduction BaaX credit first basis our stable that equity from with all our was driven remain investment-grade remain maintaining new credit both year-end. of at by S&P X quarter and committed outlook At-the-Market from We XXX at our net million At earnings, the quarter was to under increase issued offering as cash short-term first strong to

since progresses. we increase slightly Given debt our we our public increased CapEx $XXX capitalization disclosures, XXXX to last by capital total forecast million to expect XXXX spending as

You’ll note in assumptions new updated program, in help ATM Linn fund to the to is next million to Slide guidance million XX on going million appendix $XX year to million shortly. in XX of year, to we increased to and expect which equity to the that our and the use issue speak CapEx $XX a this $XXX $XX total

dividend long cap XX% a earnings in to at the our continue few a the term. confidence Slide debt range total potential. past the dividend we likely track over While illustrates to our demonstrating XX% rate grown record. growth in in XXXX, will to into remain XX to capitalization future the target We’ve years, total the debt our mid-XXs in faster

stated in we ratio the the is to his not XX% range overview. to of dividend for it to maintained we’ve amount annual now increase, reduce intent of Linn XX% stated As payout our EPS. dividend strategic the back turn I’ll and our past, of

Linn Evans

you, Thank Rich.

goals Every Workplace. strategic discussed categories: moving our Day into as Service, grouped we during to calls, XX, Now on Profitable previous Slide Growth, Valued Better Great major X and

do, branding overall our strategy. in messaging that this and be Our ready everything is to objective best-in-class complements we customer-focused and

utility to earnings serve focused growth through investment growth earnings our deliver to needs. our per future on we better share average. our long-term capital above customers’ drive expect program Based will the customer forecast, We

expect larger fully and we other from projects. addition, growth incremental opportunities generation In

continuing We’re dividend. also focused our on grow to

consecutive records illustrate We of track about our us think dividend industry. in have strategic we annual for Slide the execution. increased XX years, one the helps longest how XX

our technology our We our customers’ our analytics processes, are aligning people, and around needs.

service, deliver it working customers and customer well and we to easier business safe our customers addition our In investment know to us. reliable transforming our do for to are hard with to making experience,

and tariffs growth growth territories, recruit adding in our driving innovative unique which our penetration, attributes enabling centers we businesses. through and of disciplined gas investing new energy of In we to particular, and the are integrity the the data territories. program. renewable creating Slide are higher reliability our using infrastructure service And fit are programmatic strategic business of safety electric in systems, illustrates the our a natural of XX culture. diversity We

and utilities. the electric across our mix earnings the left Midwest and a gas stable states. have quarterly electric gas We The utilities of illustrates of operating complementary chart and seasonality between income growing on

Slide and for opportunities long-term risk. Slide These efficiency significant states span electric meet balanced for our systems provide reduces across infrastructure our and and more investment gas company operations our and total growth, overall customers’ Our of for customers. greater systems. illustrates systems large interconnections more investment, XX mix reliability our natural needs. X to diverse XX, require

Forecasted investment exceeds largely our to forecast earnings far which forecasted This safety, customers’ capital future is reliability capital depreciation, supporting growth. and on focused translates growth.

all-time This added added outer in is X-year our we Most $XXX in million forecast. and of million quarter, I as $XXX years. before, to the million rest XXXX, for and the XXXX, We needs. the $XX said being that to X-year the million $X.X XXXX, safety for billion increase of us. now $XXX in over relates We high Both period. with capital invest these plan are forecast to integrity

capital Expect fall, update third basis, and earnings. the forecast for have also forecast XXXX. this quarter this refined to On in disclose expect We update we’ll we with year. our a forecast be going-forward to programmatic forecast for our that final capital our

to as projects. more certain occur, clarity noted we we calls, and more around includes capital, forecast years, specific outer in we prior especially on and the gain comfort relatively As our add opportunities are capital

growth in infrastructure build-out for project expect of be XXXX opportunities, presentation slide larger see our programmatic than appendix continued with and capital more those current replacement our beyond. capital forecast. and Please outyear combined the investment With forecast our expenditures to for plans, we actual detail our fully of greater this in the

base the slides prior presentation. XX and on our we adjusted XX Electric Gas annual investment Slide and investor note have to You’ll compared both that Utilities for

Moving and of our Note in and Slide slide believe multiple entities XX% We multi-state benefits jurisdiction and are state around is capital that And long-lasting those investment over each through the forecasted the within our XX utilities, provide stakeholders, in recovered our illustrates XX, strongly regulatory utility those consolidation investments, our this X-year a of on breakdown timely all of proceedings timeline over Slide simplification happen our to XX% and this utility filings. would efficient manner. and fewer of for shows efforts. regulators. a will as including streamlined forecast.

consolidated in which multiple Colorado, of those gas filed Colorado, states In are regulatory a working X review, and now Nebraska simplification. all process. which and we have We are underway utilities, rate we distribution for the through are officially Wyoming, own

will by a and We in illustrates and Wyoming for a on our in plan following applications state. XXXX expect file decision approval in legal review consolidated the In each the in consolidation consolidation during of to rate Nebraska. the of completion year-end. XX Slide Nebraska, reviews We and excellence. consolidated later focus operational file XXXX rate we Wyoming a

reliability to continue quarter performance, through excellent and XXXX safety of XXXX Our was simply from first outstanding. be the our

our our Stegall include the II continue hold includes our and of ourselves then scorecard Natural investors, our we Also, Ranch illustrates report outstanding an on strong, Star including and a is And EPA than scorecard. each publish to initiative efforts year. shows X Bridge accountable key returns. Busch the To Rapid XX executing efficiency. you, award transmission improve long-term focused of the for our Our that delivering farm major utility we scorecard program, safety Pipeline, track line. construction energy the Slide performance and major our to to XXXX, results City capital residential The of to customer number better completing shareholder objectives, total Slide XXXX we executing wind projects the strategy received on much industry. for from performance XX Energy

concludes quarter, checked filing my this we consolidation. the our Nebraska at That remarks. During legal

happy entertain We’re questions. to

Operator

comes [Operator Weinstein question Instructions] from Your Credit Suisse. Michael first with

Michael Weinstein

Hi guys.

question roll drive first Gas has was is the given in with pretty kind the my utilities consolidate file and the more the the in being a do So, significant surprising over the a to that can to going next increase forward driven bit frequent or And by spending. programmatic this we Utilities? this and This basis recent. safety forward? Is increase cases rate at to expect of year again integrity X

Linn Evans

this Michael, Linn. is

try I year. we’re not my said time do one so in to year, comments, doing this intend As to a anymore we this

refine that of contractors. of to been the particular been to materials our continue We’ve a capital we what have as are We’ve the an And confirm They continue have for and our timing engineers that system. additional that customer this that project understand then importantly, we emphasis some identified. some our time looking we’ve to We scope of availability also, while. got And programmatic those and a doing this well. system, starting growth was quarter of time. we’ve been like was things for the of able that at That investments fact added got opportunities. of due the to some most we’ve group understand dissect better to

added So that’s we’ve of quarter. particular this the what bulk

call, and that as forward, go until we larger doing we the we start third maybe in Going projects think quarter mostly earnings identify we’ll this be during to unless forward.

Michael Weinstein

major a year guess, are Are announce approximately you forecast? included to the on X in projects still not I capital to X that track,

Linn Evans

the as currently of That’s projects gain bring we to what Yes. And confidence. the number pipeline, forward of in will. you necessity gain with confidence Michael. in if those, that we need a as the then have regulators and especially those got start we we those, think, and that we We’ve

Michael Weinstein

forward mid-XXs at debt dealing getting mid-XX% point? How close you are you’re ratio, path going debt that to nearing now. As you’re this pretty ratio, target M&A growth as the a

Linn Evans

paid a now, the premiums shareholders one in would the is And we think being perspective is at our part we we’re last a probably earn Right the Our it’s the pretty M&A, high. better how on focused ground, we’d and hasn’t approach see several we’re awfully dollar and what happens dollar $X quarters. and see on of put not paid changed earn in year something offer right our The that over now. respect over and kind and that of but only strategic with it’s of to it. time on that. those it, good we We’ll plan be not

Michael Weinstein

Okay. nice Thank update I’ll and pass very A to along you much. other people.

Linn Evans

Thank you very much, Michael.

Operator

Thank you. And from line our Julien of come next question of America. will Bank the with Dumoulin-Smith

Julien Dumoulin-Smith

on nicely Hey, capital the here. done upgrades

Linn Evans

Thank you? you, Julien. How are

Julien Dumoulin-Smith

Happy curious Friday. bit I Good. Was It XXXX. timeline can timing? I an fungible, Michael’s when sort on it’s back a you’ve know that I going a too? a amongst but to these little contemplated bit comment in Can not bit. but know there question little a a increase of acceleration when Excellent. things on also of go unique absolute more only are to? previously CapEx shift up. the projects seems If obviously dollars little accelerate into being that projects the bit peers, to especially spent are numbers you an if perhaps little and are other

Linn Evans

spend an were that Julien. or ‘XX at Not I acceleration There we argue contractors. because ‘XX sure some materials and up to hopeful No. not were firmed question, acceleration. and some we much Good would so was in about least

this than and up it next year’s firm quarter. what last year’s that more was helps capital us So

Julien Dumoulin-Smith

of when of bit you terms and the comment future more spend well? then little come process any that reconciles collapsed sort both then process Can << you in the the tariffs get this process, just how out capital about the also about that As excellent. obviously, incremental well Alright, process. of this on of opportunities rate it. just can Obviously, two-part as the the Nebraska kind opportunities we think there? you out talk as capital Got in filed a case that what expect of you that you effort. opportunities And should the and as filed there, then of about specifically, talk terms

Linn Evans

that is one the states with SourceGas transaction. Sure. Well, we Nebraska of the acquired

learn we continue acquired to we SourceGas. So, with evaluate what and

our on FEMSA, what need good X we continue we respect that With and be. and learn it’s a especially passed down investment Now as requirement for new to how we understand – pretty have years but to it, might comply and example, as handle with new might we to if regulations continue be that I correctly with Monday anticipate later, those to respect underway. one that’s – the a and XXXX under the that’s recall Nebraska, us We ended consolidation, in but intervention until consolidation with milestone excuse behind currently in period, expect check late so but November, last consolidation. to respect a approval box don’t to is – me,

Rich Kinzley

would to we to through that play then just XXXX. once and which And a bit file approved to and add review, consolidated, would then the out rate consolidated

until year. come impact of certainly next the won’t later that So,

Linn Evans

Yes.

up to with and review late expect the by the next year. rate wrapped be completely both consolidation We

Julien Dumoulin-Smith

Wyoming Excellent. some to then I Got believe brief it. alluded blockchain And in clarify a around new you tariff, in just to opportunities.

expectations Curious growth? behind a it tariff that little potentially just result incremental also in to see something that other state would come customers incremental leading too, low just months? in the sales, a is could voluntary and you another, or on even that’s speaks specifically renewables –when what here indicator needs capital this tariff Is of bit low probably of one few you whether of that about shifting last as it’s If obviously, mean, from pivoting I the you growth. also in incremental terms there as your can, think

Rich Kinzley

Wyoming. And from not The to statutes, blockchain very of within be, will, different load Wyoming’s as be to us. blockchain growth in your et worked incremental It home to My a blockchain. of in represent your advantageous a tariff and another loads new countries be with of for to be on passed one cryptocurrencies would mining has words, recollection, legislation tariff. load. in would Wyoming register to respect state, that to par general, allowed It you kind if the pieces changing hard about us, Singapore, they X our activities with state XXXX new being state for like would cetera, Wyoming,

as ago, potential in And to to that calls want economic make probably the tariffs we we states, a so in see ready are are as tempered all cryptocurrency of remember speaking that to was Wyoming. interest dropping, couple and this us with local customers with or with we we some the blockchain development a getting opportunity some that strong prices future partner for for seems great with the are we you might in we of put but phone years place. blockchain There and to sure have respect to have

Julien Dumoulin-Smith

much. So, Rich. Feel better, very thank you

Rich Kinzley

Thank you much. very

Linn Evans

Thanks. Thank you, Julien.

Operator

you. Thank Turnure from the next Chris of question will our And line JPMorgan. come with

is Your open. now line

Chris Turnure

Good get morning. Colorado legislation. update wanted on an I to

think is customer a kind and state? ones most the do bills last of There’s different kind out of kind as of the other you relevant today base bills of what session. bunch the your might there, I mean in customer utilities those day which for see the versus of

Linn Evans

and thanks morning, Good the Chris, question. for

you It’s very those closely. early very watching said. just as We’re

understand in XX% XXXX of year entire the bill one relative house the would We been the bills the be watching a XXXX, we’re that that that have COX some up year stare to have will we reduction and economy. that by reduction the to step Probably the COX passed. Colorado closest across is

renewables, us still discussions of on but digging impact forward what seen ultimately so had Hills, deeper, we would start we’re future. it some in analyzing passed before nature more to the very much customers It’s that and and frankly upon watching much, so obviously, very – we’ve we’re have into far Black it certainly based introductory that likely storage things to an what’s early. that to closely. internal So, and see requiring We’ve probably add look

and to for come So more early much it’s very us.

Chris Turnure

Okay, relatively question. kind And then great. another of high-level

a over You have lot kind in years lot different ROE about utilities of plan? of a thinking How your base earned of are the you X different next states. in trends

Linn Evans

December just finished earned better, treated we change for were see I We were don’t out and in of we pleased. states. now, in rate We always liked we’re Arkansas, last example, We ROEs. all big certainly say, case We’d a in pleased. but fairly would our came of a that like feel

going reduction of a So, coming, but eye an keep ROEs see that on we don’t we’re in to course.

Chris Turnure

Okay.

regulatory cases or you evolve that lower? this of rate or a lot and trends actual ROE set as that lag even earned we make assume shouldn’t changes of through of your kind investments, widens So

Linn Evans

We we that circumstances, as our No. as best under manage possibly can yes.

Chris Turnure

Thanks, Okay. Linn.

Linn Evans

Thank you.

Operator

line you. Andrew Thank the Weisel Scotia next Howard-Weil. will from of And come question our with

is line now open. Your

Andrew Weisel

on Hey good financing. Question morning, everybody.

and the XX% that your to next looks financing in regarding I compare increase this XX% needs, year if year. your equity CapEx, So, like the about with about incremental it equity

You’ve been raise CapEx. to about expecting the clear continuously

like So, my change? something is, be should might question there where point equity a all a XX% we dollars assume ratio that incremental would or on

Rich Kinzley

and as suggest would forward. spend would outsized the too. then I year next capital is CapEx year change that with a Rich. is This strong we year move This pretty

out. ATM finance But As close debt of you can – move XX% see total I beyond of with to to FFO excuse on did again, debt our our as would pointed just – kind the capital debt me, improve. we you we XXXX, continue to capitalization schedules, incremental expect we to to to FFO as added pretty over incremental

point, the suggest. And financing well that wouldn’t be covering the as would capital to equity CapEx so we at and schedule, I we additions pretty significantly require XX% much smaller flows equity and wouldn’t continue add but unless need dividend the to our would cash

Andrew Weisel

percentage – you the get XX% increases midpoint ratio? payout how of sorry, year? great. if increase, right, each Okay, obviously amount Did clarify that $X.XX maybe the target dividend mean that’s said dividend. don’t of should the the just the Rich, the comment to toward want Then to for I heard but you on the decelerate you increase. your would reduce expect we That

Rich Kinzley

what decrease going pattern our done described years I’m Yes. November to not amount want reasonably to it. approve last and in the of certainly row increase in third quarter increasing of there. probably increases of is the in we’ve future, And with I our The want to think of established Board record to release. speak A in track what is don’t years, our going XX earnings a accurate. $X.XX to kind continue I it. certainly but X you just We is the

is what reasonably would probably say accurate. characterized I So, you

Andrew Weisel

much. Thank Alright. very you

Linn Evans

you, Andy. Thank

Operator

with Vedula Murti Instructions] Capital. Avon [Operator next of from you. Thank will question line the Our come

Your line is open. now

Vedula Murti

morning. Good

Linn Evans

Good morning, Vedula.

Vedula Murti

in to on the things the of chart of whatever year, forward reason waterfall tax look on and we through an if roll XQ accounting such think a between waterfall think on item look sounded to we it, waterfall year year want again. various from you what for this I next will at we year I differences if not there. XX other will you about would all that credits next charts I be rest I there understand at the simply to principally and the on regards then Slide XX. sure congregate make like in [ph] forward the gave discussion correct? and But It decide XQ basis chart here but whatever tend said want Is that be the the be Slide tax and types reflected with to that then –

Rich Kinzley

Ranch year little got Busch the on that quarter. This we’re coming basically we’ve the third is forecast, Vedula, and in adding our which a that year, Yes. late end II at unusual, of

tax now. end So, that that tax back as excess X year that with state of taxes this a associated driver item. we are that’s the is up set And XXXX tax that the investment you the be months we get at to credits, deferred biggest get one-time tax there amortized when Also of reform production well. beginning income credit of did we

that’s So, kind XXXX, a new of that’s contributor there as a In well. item.

to starting refund customers. We’re those to amounts

the are create first are So, this this outsized item. particular revenue but taxes, reduced tax they in the year, nature but year one-time those kind not But that in impact reduced and of on quarter. new thus income

forward, Going or projects be your this additional as something but renewable added barring that answers big wouldn’t hopefully, expect I that, question? to like

Vedula Murti

an – that’s ongoing come would return kind and item? something income then credits production excess versus new credits if deferred from – item of that in that’s here maybe between that be state the the of of comprise facility item, taxes this you terms how If How allocate how would line tax stated the this tax online? items much we having like you that and a – would

Rich Kinzley

first money in have we much we tax year Utilities first some of say but the earned deferred tax you the to would you $X.X other quarter, the amount couple about glean Again, of And more. chunk item was of a earnings our there. of that just are look The this half couple at GAAP how from not or pretty million items when close, release. we to excess us requires at quarter little of the $X.X there’s equate kind on million and the specifically, and for on forecast it of tax earned in expected but in quite, that amount the recognize those first so you to can then in based revenue, you’ve are in Well, to quarter, of because there an other what given – the tax rate credits the which Gas tax – for a The quarter. a side effect full-year, the our of disclosed tax a credits, big have investment half I’d they we’ve not that. production smaller

So, out that’s of it stands why here. kind

Vedula Murti

item. of to on Then is non-recurring this much suggest maybe less How going opposed thing would as forward? one recurring this you

Rich Kinzley

certainly, the investment will about item amortization into the deferred up XXXX project that production amortize end period and too. million we excess the and not that will time. recurring income of for credit service tax getting a a will at but put will we in tax long when Well, are that tax the We the set of in credits recur, over $XXX be Colorado

Vedula Murti

and how really not occurring think that? maybe half we or reasonable is I mean, like should about so to think it of half it is

Rich Kinzley

half than recurring. is More

Vedula Murti

Excuse me?

Rich Kinzley

of the benefits recur. will half than More

Vedula Murti

you much. very Thank alright. Okay,

Rich Kinzley

Yes.

Linn Evans

Thank you, Vedula.

Operator

no questions, Evans remarks. closing the return With I ahead, to Please further sir. Linn go for will back call

Linn Evans

of joining much great Thank call in have you today and interest you us Thank thank you. very for and for rest Black our Hills day. a for your your

Operator

Thank concludes you participation conference. This for the presentation. today’s your in

now disconnect. may Good day. You

Black Hills (BKH) 4 May 192019 Q1 Earnings call transcript