BKH - Earnings call transcript Q1 2021 | Black Hills Corporation

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Operator

Good day, ladies and gentlemen, and welcome to the Black Hills Corporation First Quarter 2021 Earnings Conference Call. My name is Peter and I'll be your conference 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

Good first Peter. Welcome Black to Thank XXXX morning, earnings Corporation's quarter conference Hills you, everyone. call.

the website You and can call www.blackhillscorp.com our our our Chief discussion President President today Officer; materials and heading. are under quarterly at Linn earnings find our Vice this and Officer. earnings morning Rich Chief release Senior Investor Financial Leading Relations and Evans, for Executive at Kinzley,

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

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

Linn Evans

our first begin Thank morning, us achievements I'll you which everyone. on quarter. the key lists Slide for you, today. during X, joining Thank Good Jerome.

threatening our our of with customers team of gas extraordinary keeping reliability successfully our Winter through We performed Hills well team's Hills and life Storm served Our natural very in through the and and top the cold exceptional service Black priority historic service decrees our systems which fleet I'm electric with across generating demand, territory. conditions safety, along of safe proud Uri. Black performance. our Corporation weather works hand-in-hand is territories. predominantly cold our resilient The

while power completely rolling even Our generation capacity of South us served a peak and experienced allowed including load. Dakota to winter generation new the utility blackouts in avoid country, areas our electric resources, balanced reliable other dispatchable of mix

for customers X customers protects natural on freedom Uri of gas and type week announced, for we're during our customers safe, below voluntarily companies we need states critical utilities we joined Arkansas, X by are is and energy was passed energy capacity as ongoing how our Kansas This lives. didn't new the of our value our gas Challenge events, to essential minus daily territories. in across recently pleased encouraged an during make a experience we focus of ONE happen we Winter below it of by that population Slide highlighted commitment connections the X, Storm ongoing low and these our announced as of into legislation utility weather gas our gas Lincoln, success in emissions. who that our Future Storm result Coalition safe, straight chance, for choose customer lows addition reliable our record modernize driven migration X reliable our X, Methane example, infrastructure. more natural our to our with in the February customers EPA's generation XX numerous the when XX right lows serving Wyoming an Iowa, storm investments growth rather Last and on in the enhance to reliable of Nebraska The as our service to the is reducing steady Continuing pipelines resilient. temperatures previously by participation all-time Winter demonstrated relentless them. Recognize remain temperatures course, days Of reported setting a our degrees resilient XXs. Uri and is our of communities.As

financing and first agility of strength the strategy our the our showcased during quarter. also team Our

million our term outlook. short-term continue ability conservation capital Given February, initiatives gas we funding loan liquidity additional an favorable supplemented our This cash sets immediately on with financing in the natural our to loan our $XXX for ensures strong terms. ongoing pricing financial unprecedented program. and and investment by unforeseeable term market out X other securing Slide

tempered Uri release. was performance as brought cost financial our quarter by earnings in storm by outlined about first Our

were these storm our absent However, cost, financial otherwise results strong.

February expense financial cash in the executing opportunities storm, Rich the we're of update. mitigate on initiatives management During and we other will implemented cover immediately to storm. impact the details and the his

of ongoing initiatives the we year, remainder guidance the remains these Given XXXX this for opportunities unchanged. see earnings our and

We noted continue. efficient into earnings growth. projects migration XXXX The dividend are our X% X% population growth our we're use continuous such we're is in innovative develop other territories our and growth upside and reaffirmed focus will least illustrates already confident as long-term last growth I data also solutions accelerated center processes These discipline on X% and and expect remain cost the earnings and at long-term load incremental our initiatives other new technologies in to of slide through every this item and seeing with less including technologies. capital additions targets, we developing be also projects. on intensive through customer Slide for XXXX including billion XXXX for a better to $X than gaining improvement. and guidance confidence disciplined opportunities more that we this potential. X including day. to leaner We're We more renewables identify trend investments other service growth annual and plan plan capital on XXXX and

X. on made our regulatory Slide initiatives. to We've progress Moving

safety we years our and integrity and X new more renews our X in completed and filed a rider. in X before Kansas, safety in integrity file rider. is system review decade, review year rate be to filing we're we which a review our rate first finalizing first rider. We in In than request to quarter. our regarding a the including team system to plan Our file integrity the hearing investment and Colorado Iowa, ongoing rate applications second a a new commission recently review rate investment And for investment plan for safety Gas,

with normal our engaged for we're to regulators Uri. associated addition costs regarding recovery activity, regulatory Storm with In

Moving to Slide X.

electric systems. These add gas We're battery impacts transmission modeling pipeline our effectively additional electric demand is demand. serve gas gas cost targeting scenarios we to as goals. integrated to resource our change, in meet generation, for customer reliably submit and July is various dispatchable growing a which achieving consider a to customer planning greenhouse resource to our South and our subject operated For and natural upgraded Dakota emission customer achieve key our storage, emission Wyoming our growing always We're and plan capacity. scenarios early determine utilities, best focus, goals. jointly modeling need to greenhouse how Initial indicates renewable,

scenario to economy-wide utility long-term Administration's finally would it emission opportunities are And process strategy growth gas modeling future and our executing greater a into these are considers excited upcoming outlook. a that now financial update. we look goals in cost We I'm Biden integrated the in over for we're confident the and as clarity strong provide this the also customers. to about greenhouse that on an We're customer what our Slide as with well turn Rich positioned X, focused I'll months. future.

Rich Kinzley

weather adjusted EPS the Uri were earnings everyone. Slide compared and $X.XX Storm first Winter in what good as QX $X.XX We share for per of Impacts summarizes XXXX. morning, overshadowed Linn, quarter. delivered to financial estimate from by XX Thanks, share new the normal. weather rates. than storm per favorability per results. benefit and The compared $X.XX We net solid impacts $X.XX benefited earnings were share, otherwise of offset to which more

supported In The in largest the first Arkansas, Recovery is This program. South utility regulated and Winter share million cost and This $X.X year choose Electric. which approximately provider a option for Choice constructive requests their million XX,XXX in heating Nebraska quarter. we the offsetting our by normal addressing to utilities, storm-related Black customers quarter, Gas is utilities within states per or may history filed a hedging weather details quarter, some million low impacts. with was QX the regulatory warmer primarily requests than other warmer purchase the our based asset. $X.XX utility January favorable program the Gas on plans in the of Nebraska electric XXXX, than X% In share, remaining and normal incremental to recovery higher already in proposed a Hills of for contributor was includes last take We've longer. our $XXX given Services, in are Serving Wyoming as a serves attributable at in normal expect at storm-related quarter procurement March. Dakota of filed and allows deferred season regulatory Choice Energy first gas of at and X gas X first year.Slide February, customers. and days weather pre-tax we tax. profitable expenses small, customers fuel For non-recoverable XX $X.XX and by gas our recovery states impact Uri degree heating net cold or Iowa, file business. $XX.XX to costs with costs years to vary gas through million Wyoming had risk after to in extreme by higher while X% We've booked incremental normal serve piece customers we Compared a our how quarter, the dialog state were Storm per of second and than of than utilities and our to plan booked demand we $XXX our incurred or regulators forecasts. up our

by Uri. subjected it elevated to was the unprecedented pricing and demand storm However, market caused

of our businesses, was electric $X.X million partially wholesale power $X.X power offset impact of sharing to generation benefits. by our million For the margin

rider of which by late outside through but Corriedale Wind demand. Project Director cost compared to price quarter. industrial impacted year tax passed primarily Electric remainder improvements risk recovery and year. utility we into power lower customers. utilities our income driven prior the we to services This drivers which over was due net primarily to reform compared the utilities gas this In of last to fuel the Outside quarter that after-tax. the was expense margin Colorado February, the identified piece costs typically in also for the income tax elevated in than the resulting Storm overall stronger over that prior main year-over-year proceedings. a $X same benefits, pursuant increases listed management, tax from where in our rates of mitigate right first in prior to small implemented for in deferred to regulatory services. XXXX.O&M ongoing to Uri were very We had gross of impact contracts. change the year million quarter-over-quarter investments production to that went and to benefit, by and far market illustrates minimal XX other related in driven credits Montana of benefits market the offset higher on QX opportunities year Uri incurred on drivers are last change favorability our strategies Electric additional amounts costs by and X gas benefits additional $X.XX credited customers. cost low to on EPS offsetting outside recovery tax impacts of The impact pricing lowered are the at an over higher income immediately expense. performance, The the Natural by margin first year reform employee tax serve year wholesale we subjected of increased new million much The and non-qualified margins because impacts. tied were We were base weather were and Slide is our $X.X service All our regulatory primarily customers year, in revenue stock marketing mechanisms, to unprecedented compensation related over fees was results. was

first can segment in quarter found Additional appendix. be on detail earnings the

gross in find structure, of margin shows ratings position year-over-year expenses earnings Slide capital XX yesterday's through You details on can release. also in and lens credit the changes our financial operating additional flexibility. and financial

of repaid cost. million expect term in a credit our loan grade end to At year a that April, term are bolster the We bulk quarter month the Storm with deferred we credit X to to liquidity recovery period end the increased we approximately X dollars Uri the our refinancing match million fuel as and In solid developing manageable revolving I fuel finalized committed $XXX recovery liquidity our maintaining appropriate for strategy loan investment issue $XXX Uri second third X or ratings. million debt debt term we of $XXX we remaining Storm the into million the have and of the mechanisms. Uri. are from facility. February, quarter maturity related available an the had costs of profile entered will of on the at to in We $XXX to of light Storm

increased to total debt New March. deferred temporarily of cost XX% recovery debt to the and at of our fuel end capitalization ratio

recover As execute to debt on equity continue the ratio XXs. costs, total reduce storm debt ratio repay we and mid and to our to target program, a debt total expect we the to in capitalization cap

Our issuance unchanged. equity expectations are

to and We million expect in million through XXXX $XX our $XXX program. million million $XXX at-the-market offering equity issue to to in $XX XXXX

We evaluate our finalize will we cost financing proposals. continue to needs as recovery storm

rate XXXX dividend have our of proudly we one track X.X%. an the Since longest dividend increases, we consecutive in marked increased XXXX, Slide In years to dividend our average of industry. annual on XX. Moving at of our records XX annual

XX% than your closing, thank X% XX% through you Black Hills. XXXX in our interest anticipate we maintaining more annually increasing target. payout forward, by In while for our to dividend Looking we

We jurisdictions utility are integrated stable growing in a complementary mix an with positioned uniquely as across territories. constructive and business

to operationally continue be your We be questions. ready with to to all well our to And available stakeholders. positioned we're take and that, financially serve both

Operator

show our first Suisse. the Credit from Michael line of [Operator Instructions] comes from Weinstein I question

Michael Weinstein

can be been I you do Has helpful you is I discussions? have how -- that be, the quickly basically and settlement how there as discussions? the staff, case guess, -- by to will the mean there, along don't so right, prior to that settlement case know, Colorado, prior hopeful I reason there is you're the new -- so new lines Within resolved the with new Is it's filings? -- same maybe is that found be same the a affected a,

Linn Evans

question. case make -- have want refile during refiled second your that refile asked to the quarter, working will We Phase filed implied so to what also second the in wasn't sure were we we'll the new quite quarter. Phase that filed the during that's a that the X Phase in now. We not X and shortly, X, have have Phase file We'll we're on the X yet,

the yes, As understood thought worked you Consumer Office prior with case we of we staff, had that indicated, conversations Counsel, and our case are closely that were hopeful constructive. the we they very very

have response with of Office hopeful similarly with to a the and case are a staff then similar anticipate from Consumer and case also, Counsel. we We're Colorado also, we so And commissioners new tackling. on -- Commission. the and that X And focused I the and the refile think, very we engagement filed Phase in X at second the we'll the we're have relatively might we the similar that blocking benefit then really kind of

our X that the weeks. around issues we the pursuing rates, those finished on And decision that so also that and longer SSIR, We're of involved the a on of finished Rider hearing things jurisdiction last anticipate and so. next simplification, recently, no very Colorado cases nature. within System Integrity week a Some Safety last combining we in

us set combined, nicely Colorado positioned those in forward. go all up better as we think I So are much

Michael Weinstein

terms plan? any, forward. that process included -- are large anything is Is you Sounds might looking maybe like on not there this that capital in potential the at there projects considering Are for be projects plan of be the at smoother any could the or in a point? capital color going

Linn Evans

beyond growing incremental anticipate some over filing some is are of our forecast, dispatchable generation load will storage, got transmission said, plan An that some capital opportunities, as opportunities energy we're program that years, that. and and on regard. We're migration South to as the included in Dakota well, say resource the customer probably be as that $X Wyoming of and opportunities other me little and within to early customer demand. say, that plan. we've to element none integrated to of service through opportunities X.X% our well. respect that opportunities growing so renewables we've we for We're growth X% none capital helpful always Yes, inside we're are a very be but also the should back working anticipate will current growth July identified customer and our next we'll billion identified X that are important that, that now transmission, -- well serve in with are -- current IE I load have of gas grow that that, up in We batteries, that submitting our let and included serving also from we our moved into about or territories, that's been us in hopeful very in very customer of perhaps count

in we've that growth the So are Colorado the to of continue Storm have those that, we analysis Nebraska, a Arkansas so with that agriculture Uri, that helpful. seeing a we seeing serve to that and course interconnects, et been kind at. have that continue and in poultry increase The very grow, deep of on continue look And look we're adding we're to making barn resiliency do closer to as at alternative we the pipelines brief reliability cetera, that. got new things been and and real investments deep

believe And Uri what certainly kinds of so mitigate continue learned that that will Uri from learn we us we as that investments we control those things Storm we're those looking well. can -- through had we help Storm can and at

Operator

Ryan from of from Greenwald Next question comes Bank America.

Ryan Greenwald

guidance income are actions into when the you to particularly bit a given talk mitigating bit how Uri here in trending factors, a kind impacts hitting Can the the of regulatory here. deeper about around what's comes statement dive it you range guys and the the

Linn Evans

first it's Rich. well, Ryan, Yeah,

guiding XX, if we comfortable reaffirmed with -- we're lower mitigate of we're it's the our going range, the range, at early Uri. opportunities say, that line can $X.XX, will. I'd we the some focused that, the be our got will, that And confident in all about recovery terms we items at regulators you you When so the sharing think Slide about we're that's remainder the goes And that occur. the this actions loan mitigate or when look of comfortable recapture year. not we're calling where we'll are they upper including and we're the of back, look the to along you year will item are we've with impacts items toward talking not the First controls about our the some certainly of as power on that that end, item, you we the expense, to in to there, smaller storm wholesale of and discussions then on then can margin take term year, if from cost $X.XX interest

the As talking continue Linn I to flex COVID ample to noted, year have was the mitigate had or those before to we we'll and when all opportunity and muscles him with that amount. remaining we those majority call, just last of to flex believe muscles

Ryan Greenwald

terms fair with And in the the and agenda again. remind you just the it, Can process timeline in us then of process enough. Got regulatory each in is upcoming busy for jurisdiction expectations cases? here, getting of terms pretty from rate

Linn Evans

Sure, we can that, do Ryan.

have of Phase Colorado. filing the that's also reviews in and second on X this the top rate that X file We during we'll to intend we that quarter be

year. case indicated response a to had Gas, filed gas replaces So in the as rate quarter in review last in starting which with September that Colorado we file of we Mike's question, Colorado, back in anticipate this my to I

in Rider Safety one renew in Integrity can which years also we last go primarily has Kansas, -- well, filing filed review there Iowa, that's -- in been a since since be sunset if last in Iowa. as case that our in XX We'll our to be also obtaining And be and Kansas. a we're asking we rate to that then the case in Rider Iowa a we'll Integrity we successful first for the let be will Safety that, are in back a first as we that'll filed to intend also years X there Iowa, me We ensure ago, file case System that. we System -- for

those. but be with different And So right I our working the your this out that, year. kind interim Ryan, this are the on Hopefully those get question but on can schedules see, resolution associated them -- was I Then part think procedural be procedural Iowa they shortly consideration think year we'll those. year, for is they're are Ryan. One we can in do quickly, more that's primary X we generally speaking, we'll after an important cases we up that some so of next QX each file, side that state, timing wrap of think you other of probably rates interpreted about. schedule for if would of to of note

Operator

the from comes question from Weisel next Andrew Our line of Scotiabank.

Andrew Weisel

is metrics. My on question first the credit

on you you them include about get as XX% about would then does So do your think And by forward, in to obviously back looking of to to increase the cost all, XX% cap. year-end Uri to is you expect reach you debt to accommodating -- debt term you were described a on weighing that assuming when first around how you'll cap you under The X% decisions recover loan? fuel recovery? target quickly where and said expect

Rich Kinzley

number include loan. so does the questions X, were Yes, the there there. term a of XX%

at end why year from XX% So popped to now. XX% we up that's

we're terms into recovery, deep of Second, in discussions.

As number we'll the recovery quarter. get the filed already we our second rest a jurisdictions in of in filed comments, noted in the for states our and of we

rapidly start a Wyoming that mechanisms these recoveries, little are even X Dakota part. and about Electric course Colorado, impacted Some X, were mechanisms, of just constructive to -- the most the year some We But our delever us, fashion years. you impacted of those more our ongoing Andrew. with Arkansas, Relative states, for recover then to in through of X, X probably a are Kansas, those the jurisdictions should discussions getting expect and states, more those conversations. heavily jurisdictions, to Iowa, the like think in are place would X year XX%, mostly I very that as in quickly recover and smaller those are think once which South as to the it will normal recovery we're Ryan through and X regulators all making X, back that to Electric

I to really we this absent years where otherwise from now, X be of if we of storm kind deferred should be, should would recovery. think been, cost we think to you X back have

questions. answers been that shape of most think in agencies constructive your well. Credit I and there. we're the metrics, I think good with very productive have rating as Conversations

course Of on and meet what see come out how keep with to our like, they periods to regulators look are. want recovery credit and the the where expectations we we're they but we track ratings think their

Andrew Weisel

Then just one follow-up.

reductions? methane I accelerate in expand the joining XX% gas drop about apologies Future remarks, utilities that? targeting out nation's your the it. please Future you that or greenhouse to goal put by our opportunity stated a toward emissions You future, you're create release think If press ONE gas emission Linn, in missed me, prepared Does if and mentioned recall, from remind joining you I But have energy a do XXXX. this Coalition I ONE

Linn Evans

Correct, fact of learning companies the XXXX that successful using consistent, reducing practices reduce why already and a to best been intensity is with we doing have natural respect of report and that. team us really on is join very goal goal them, also -- gas XX% are that Future -- the utilities. our the group year the we to ONE how emissions in being below I X% we in allows the and our the ONE reason by joining Future, is it also in Andrew, our we joined to

With as that attain company So consistent us across practices, we that puts that we we'll and respect learn goal. puts with that. report company ensuring with as to how continue to it we're in in also industry good the best well good us

Andrew Weisel

are that you is methane that So sort X% still level it or out? is to committing being a not --

Linn Evans

reducing been XX% Future that put is we that out, different emissions to goal their by sorted the ONE those intensity from intensity of which our X%, by companies part about, XXXX. that's is a members have reduced of what the our That's ensuring

of So oranges there a it's kind bit, measuring and apples Andrew.

Operator

question comes Mizuho. of next Brandon from from Our Lee the line

Brandon Lee

and I just filings. the had thanks question, a all on regulatory quick the updates for

issue or and the recovery, the For expense? to expect do you at recover do at it's opco expect your the parent at storm all the you to cost parent, level, the debt interest if

Rich Kinzley

going to jurisdiction. differ Yeah, it's by

than First the of much parent, the of utilities our issuing small all typically opco's. financings, how that's all, the issuance will debt efficient we be at at more our chunks with smaller do

certain, be recovery a company So it look discussions to with and what how carrying the recovery, are does the it parent they about issuance. will it how we almost regulators, period certainly we're changes those think Relative longer about think the is, having recovery like, of costs.

So can we that but do go in costs. states, the recover of carrying different a directions different to lot expect our

Operator

comes from from I Instructions] our line Brian next [Operator of question the show Russo Sidoti.

Brian Russo

projects guess, press million your guidance going you're noted in So $XX base the to million and assumptions, $X.X your layered Slide in million, you just, the In when release you've then XXXX right? $XXX base have the I I forecast. you the, So look forecast? incremental above at XX, outlook, the 'XX incremental expenditures forecast spend capital under of

Rich Kinzley

between and cost you coming included quarters as find in confident, so in numbers the for timing, identified, yet and projects projects and Effectively the that's what mean those that confident years out. -- forecast those and we line base we'll yes. not are they're filled get we're which I We evaluated represents. were forth, very But being flow

Brian Russo

on to months that CapEx IRPs and question X be could projects And related already regulators? and you that doing to about the these take what seem how one-off project? and by projects Is you're versus lumpy this relatively approved; tackling -- Or be incremental manageable. renewal type could blocking XX referenced these upcoming to acknowledged are contingent that incremental on more another IRPs just

Rich Kinzley

will a there of what IRP combination that, going all the of Certainly some of year the Brian, out, but is to associated of with going be say, point -- above. it's some be I opportunity what the X some near-term it's would some plan. this to beyond

blocking and is lot foresee this a everything that year incremental is tackling, of spend, to million it some -- of relatively $XXX well, as just table you're that seeing described. the some of mixture it's this million some of of just programmatic blocking projects So we -- lot $XX you a on a a

Operator

I no in to for Please queue, questions remarks. further Evans closing sir. would turn the like ahead, back over go With the to call Linn

Linn Evans

thanks joining Black especially, your and in thank Hills for for Peter, interest you Thanks, investment Corporation. and and us your today, certainly everyone

spend we As this Storm Uri. we thought we would, impact the time morning addressing of some

And future thinking we're variables the natural While look months. to Storm were Uri same and designed. we extremely we've as very the as the circumstances, past extremely reliable and they unique events, storm and we thing several electric recognize a our that of performed weeks confluence can the opportunities were and during doing likely systems been about and spending similar within company influence for time presented we rare gas and mitigate -- our

our kept and Our prior investments storage safe and reliability in our interconnections, off investments in paid healthy. customers and really

Thank So I say well and the you, in and Energy. that. so values our living dedicated Thank as we're to shareholders. very to want on for can to focused thank you our serving and QX, every Hills for our team customers finally, you customers admirably for work as Black core you single I you hard executing day. have at of out assure And for you, opportunities our results deliver our

please Black stay enjoy for Thanks and well, So joining safe our call safe day. Energy today. and Hills

Operator

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

now disconnect. may day. You Good

Black Hills (BKH) 5 May 212021 Q1 Earnings call transcript