BKH - Earnings call transcript Q1 2022 | Black Hills Corporation

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Operator

Good day, ladies and gentlemen, and welcome to the Black Hills Corporation First Quarter 2022 Earnings Conference Call. My name is Liz, 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. Investor Black of Corporation. Director Nichols, Relations Hills of Jerome Please proceed, sir.

Jerome Nichols

and Liz, Earnings Welcome good to you, Conference Black XXXX everyone. Quarter morning, Thank First Hills Call. Corporation's

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

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

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

Linn Evans

everyone, start morning, performance our Good you Jerome. us. first thank quarter. I'll the for you, Thank presentation, which joining on for of X our Slide and investor summarizes

the Our team to providing year. delivered start excellent operational great and financial quarter, performance during a the

electric and per XX% contributions utilities. increased both year-over-year gas share earnings our strong Our with from

Uri in over gas constructive X growth cost earnings quarter outcomes the including the Storm strategy reviews Our first quarters, regulatory recovery. and rate reflects several of execution the last our for

territories, during our migration ongoing that supported customer off-system the strong customers energy into benefited generation also our driven growth results availability shareholders. from by and financial benefited profitable sales quarter fleet population and service Our

at keeps lower top their key customers. availability reliability for fleet excellence and which a average, is on higher the generation costs focus quartile is to testament much our our to than industry operates operational team Our and our

safety country. always, is as our we in be priority the aspire top to utility As the safest

our by meet achieving core focus, As to joins Wyoming XX than more Association, XXX strict example the standards. safety a Wyoming was safety of only our at an these team's other safety from Mining mines National certification recently recognized

collaborating plan capital schedules we inflation realities. We're and manage for these the our certain our meters needs track on for are Our XXXX to developing adapting prioritizing ahead, proactively are address partners project distribution our address these as procurement chain to with year challenges. as we're chain and projects sourced already is equipment supply and such Most longer transformers looking and supply and times, items lead through our of challenges.

continue growth our to resiliency strategies. We advance also and

we Wyoming. We to the a in hope the before have contract includes delivering begin met contract with provide customer The a customer we be by must that signed later and energy, energy conditions blockchain year. this

continue requests other also service for our service evaluate under interruptible to We blockchain tariff.

Wyoming project discuss ready I'll project continues along. move further to proposed Our in moment. a also transmission this

on consistent X, our with listed is is prior outlook disclosures. financial Our Slide which

per share $X.XX the anticipate the for to range to of in continue year. We $X.XX earnings

We EPS period. and the XXXX to of continue dividend also annual for X% of during same least to growth X% target X% at through growth XXXX

X, activities. plan over planned next and $X.X for remains the X regulatory Slide capital base at Our update current billion years. a our provides

which Uri. experienced during of by Winter we're million nearly resolution that as and we regulatory We've we for safety-focused to requesting active filed costs incremental our fuel process more expected, rider. The year-end. regulatory currently $XXX investments last an completed recovery is of process recovery relative Storm our than anticipate continues our December, for rate enhanced and for approval only Our review Gas, Arkansas we

electric Gas We're Gas. storm. all we begin stabilize costs will the of of quarter we project for process, the Ready-Wyoming the the And through as project, Southeast our expect Wyoming, $XXX a view Arkansas is of resolution a line Cheyenne of our moving recovery February customers the Ready local for We If shareholders. which waiting incurred decisions request full systems first Wyoming the costs. approved, $XXX The by $XXX and and region. million mile we've our for fuel XXXX states, support approval million extraordinary this and regulatory of recovering year-end. to resiliency during we next currently health million electric final we transmission recovered for for our we're is in expect enhance of the of customers, proposed to and year, continue for Through construction In expected the cost February, win-win XXX year. for of Wyoming and filed Wyoming economic of incremental the

settlement we're forward, year. review we would Gas, gas Natural option by reviews X, RNG our customers our this renewable plan In provide pipeline agreement. to utilities, Colorado. also interstate rate tariffs review we a an file Electric usage with biogas in or replace file natural for all current June gas. rate file Looking plan to file to preparing gas Rocky of natural a X to X prior in portion natural or natural gas their as states required rate to that And this later year a Mountain for We plan by a Wyoming

our resources. to of slide expect by for to energy August. in the as resource for to resources resource intensity Electric addition XXXX our Colorado sets of reduction will company-wide in year, Wyoming in for identified finalize plan. XXXX process We're the Colorado in gas operated X segments. megawatts our electric also jointly plan From XX% supports and carbon X second a our to megawatts we're a Slide this our baseline, May, last electric natural renewable gas of utilities, a achieve on steps preferred battery South Nebraska profile planning natural and utilities final an next submitted to achieved on XX gas followed greenhouse working in cleaner at energy for the our The emissions which filings file Dakota storage preparing future. electric goals in Kansas and relate plan for We X up already reduction clean file and a add XXXX the base emissions XXX quarter. well energy and require and a and We're we've year in system. emissions renewable plan a more XX% in to for This reduction the by track items reduction utilities. before XX% We of our

initiative in the August. natural our SASB, TCFD in first disclosures we including other will Our And be disclosures, updated also AGA templates August. gas & will time, with published for sustainability report, the EEI ESG sustainability and along publish the

Black strong. in Moving past for our we bars overall states the and to Hills same the our that our for we note quality rates serve. over during X remaining Slide Colorado growth The jurisdictions particularly I'll national the with gray the illustrating orange within serve state's the customer well Arkansas bars total states average. experience growth rate on this X, growth jurisdictions and jurisdictions period. we and The years growth chart of the the that displayed in on which focuses serve our service average, customer with population the customer Energy the above are growth show territories each territories

the Midwest index and community were Wall X Rapid City, market we're listed we as sustainable We're provided emerging growing Street the our fostering at our by Energy Journal base by by improvement. We've initiative. -- highlights as top in number also Slide ranked the X on recently Forward innovation published also rate Here housing continuous through jurisdiction cost relator.com. estimated and this slide. savings an

executing other customer our about excited team. electric with jurisdictions, company-wide XX growth remain to initiative delivering growth customers combined territories. now, our program, opportunities grow our tempering stable our today. We're incremental is customer-focused on utilities the stream diversity as in growth summarizes which our financial processes investment through projects, I'll opportunities, We our opportunities it and turn constructive long-term service us as and the ensuring earnings developing Our of discussed to inflation long-term impacts plan. customers confident capital many we're allow a as our we've for to the That of improving our in that on update. Slide on assist already focused effectiveness Energy about efficiency factors, growth growth serve and and and on and in strategy our will our over we growing and and comments. effectively for shareholders And efficiently Those long-term Rich our possible. my program customer-focused We're excited across focused and have strategic us value gas Forward targets. and Rich? completes

Rich Kinzley

operating segment We of which start year. to I'll Linn, to Thanks, $X.XX our XX, EPS compared morning, everyone. compared for and first delivered shows quarter and on good XXXX. XXXX EPS $X.XX last Slide income

like and amount. program $X.XX QX XXXX weather first from also included both XXXX. first contracts. from higher QX by XXXX debt the The income balances EPS XX% drivers tax. we amounts strong Operating these year-over-year Also, off-system at of after impact that's As are in gas DD&A key new we mainly benefited on maintenance were higher our which while utilities. income normal, and I'll margins outages QX year's cloud our detailed $X.XX first at contributions to electric strong expense from Linn quarter from Electric compared investment of higher XXXX. in costs mark-to-market contracts, back are this sales EPS increased interest an EPS related illustrates taxes Uri. quarter our a on growth, customer by recovery, due Storm X%. last year-over-year, Storm net adding XX due to $X.XX was was energy higher that Uri. year, mark-to-market this items to reported accounting data QX capital still margins to negative income the detailed Compared in drove rider and Colorado we mainly our rates taxes. higher up the electric and TCJA energy in the a margin and licensing Slide year's as to yesterday. quarter. energy cloud to to due O&M All $X.XX of are last items. release noted, of There XX%. $X.XX EPS expenses both Winter were centers this and and with a on quarter increase year-over-year from mark-to-market a more benefits to negative added change tax from slide $X.XX earnings impact increased on property refund of reduced XXXX even number in activity of earnings to note drivers generation for move utilities and results, the that when had computing due that to planned Weather And Winter Last increased in

details Additional structure, our to and on in the later filed changes XX lens of position yesterday's capital today. year-over-year to be credit available expenses release operating in are XX-Q margin earnings shows and in flexibility. financial our and ratings Slide financial

have solid manageable ratings. We we're debt and profile, a to maturity investment-grade credit maintaining our committed

Our from down year-end, quarter total ratio XX% cash and XX.X%, strong debt recovery to of costs. to first Storm improved at flows to Uri capitalization thanks Winter

achieve At structure We expect $XXX as on generates the XXXX early available and we execute of million April, capital costs, of repay flows, target over cash had revolving our or our our credit mid-XXs of we equity at-the-market strong program. facility. XXXX our liquidity to offering recover business storm and end by debt late

of increased We've X.X% our years. to XX. Moving Slide our annually average over X dividend the on an last dividend

one track quite Our industry records the and consecutive XXXX proud in a XX increases, of of represented our we're of. dividend years record dividend longest

information this maintain payout dividend Slide XX% X% we Linn's comments XX% Between Looking comments, that, more slide. with our our than And forward, as outlook by target. to annually on and our covered overall illustrated we've questions. the on through financial we my increasing take In anticipate is we'll closing, XX. XXXX shown

Operator

to Ladies and questions. gentlemen, [Operator are lines your we the Instructions]. open ready for

Your first question comes Bank America. of Smith from with Julian Dumalon

Julian Smith

me? you Can hear Linn. morning, good Hey,

Linn Evans

Thank you. Good well. morning, hear Yes, you Julian.

Julian Smith

disclosed. first on Thanks time, guys. the just to jury I item check wanted well. this well. in you're Quite Hope Listen, for

the Just can. wasn't in it. in the and it here more earnings if just it, -- bit to process on little past a in about thought more context haven't disclosure a just you why on a I seen little bit lot booked talk behind it of

Rich Kinzley

at Yes, looking think quite the Linn quickly. me Julian, I He's that didn't question. hear

XXXX. defenses that answer like can disposed accrual. company against this We in I'll he of We to there's at and appeal. That add our to oil gas it. plan relates disposed we have it, time, meritorious feel black recorded So And we and as nothing an to that.

So…

Linn Evans

I'm Rich we Julian. We That off. longer going own appeal that pursue right, sorry, the very phrase and no is your were is operations and of have it questions, I we entered didn't yes, Rich think we're by me we well. hear to jury first and your But surprised threw rights, meritorious those. verdict, operate.

Julian Smith

it. Got

some here, Okay. you terms argue realized, this Again, if And just keeping that times, of anticipate materializing are seeing Fair operations going this the is could can. some here? of Bitcoin mean, I -- if then point of and in core load terms there. follow-through How you sort of be I on to enough. to there's On the at -- will. you do integrity. in one what at of back much dynamics

Linn Evans

are… you to where Are the speaking you

Julian Smith

exactly. Yes,

Linn Evans

were very, we remember, very getting customers. quite then And that we you many -- our and response top picked We as RFP in phone strong, potential had that from RFP response was Yes. calls may so to last we early because an strong couple. a did Okay. to year,

a We one negotiated be is confident year, And nature. start we of the to them condition get of and opportunity energy they'll that be additional with before agreement respect precedent agreement serve we'll have supplying them. those mining and actually And end part opportunities things customers. We a accomplished. that we responding to course, of the transmission, that before then that would with feel are of crypto increasing of signed to contract to supplying this Wyoming in energy. see to we There others,

opportunity serve pretty rapidly, a frankly, going well for to load. for And customers doggone serving gone already strong So we're us that's pretty that a growing pretty see good, are we the growing us. quite and

Julian Smith

the can Got further. it. And clarify if I then maybe question

of here, right, you mean -- contract said, I had highlighted -- of a single you've coming you as you As you and the have respondents that. out a lot RFP. on got here

line you kind of perhaps initial Or bit back there? about we a think waiting more time As should realizing respondents, be is holding little those and more? there a of

Linn Evans

that long-term I very the have sure we want high just of being good are counterparties we're nature. think -- that customers, we're make that make to things sure grade there. We we careful to opportunities solid,

focus our been so that's So Julian. far,

So we're hurry. not in a big

demand. of plenty have We

shareholders. it's So the customer, factors, us of the the maximize about power customers that that nature of help things quality for and opportunity

Julian Smith

Thank will there right. leave to it. All Well, Fair enough. I Got guys. it other. you,

Linn Evans

see we you Julian, you, Thank at AGA.

Operator

from Brandon Your next with question comes Mizuho. Lee

Brandon Lee

ones. and Linn, a just Rich, of quick Thanks, couple

the inside the alternatives? given portfolio? and LDC the energy for need Just fuel evaluating potentially more still diversified backdrop are the supply, gas are assets valuable strategic you more Or

Linn Evans

years assets. paramount I Well, and for as we've that our I constantly with assets. with evaluating question is portfolio. added We've way answer Brandon, the this always think, last me for to We're what's said proactive customers our is quarter, very to And been shareholders We've decision-making. best XX-plus divested I've best been moves. our the organization,

have We generation partners our especially our in assets, assets. strategic

think now, to creating it long-term that, further be always record I again, our track right shareholder speculating we've be approach regard. value. in our if that anything a than said So Brandon. But that proven will would And I

Brandon Lee

for the we Or just year. up $X.X have about rest capital of call view million quick that you million Sure. you let's $XXX million, surprised the stocks talk lining like million are strategy, That's of only needs what with have talk on gained I'm of do utility $XXX And year? guess about run the of or substantially it, can question should a helpful. for the up throughout equity of your can just or you've -- the $X -- little It you a equity. And I year. done have that you the spending? just how guess your I timing seems that

Rich Kinzley

we I of judicious way up think got stocks, to kind the spread need of get are we The ATM quarters to Yes. at done remaining balance that, would So the the stocks time need to end I right right, happened and have were X run the We've and first through of would the right? to that utility quarters plenty dates, done. what about quarter. pretty view more get windows quarter, Brandon, go what of you're certain of year. in those we the but

Brandon Lee

had. Okay. I all Great. helpful. That's Thanks. That's

Linn Evans

Brandon. you, Thank

Operator

Instructions]. [Operator

with Your from next comes question Andrew Scotiabank. Weisel

Andrew Weisel

everyone. morning, good Hey,

Linn Evans

Good morning, Andrew.

Andrew Weisel

First prepared is did unchanged. just see question, the CapEx in remarks I Linn, you slide capital to clarify, to you're adapting this supply your bar that chain in in the response constraints? plans see

might be around, what So type if about you heard spending can of you right? elaborate shifted I just

Linn Evans

We is projects. within strong the for question. of year doing capital ensure Good Yes, year multiple stay and maintain beginning been that a to next to had balance some for is what that. this defer we've Thank we that we've forecast far which sheet. one plan for slightly to so cap, you reasons,

And spend and prices we up at primarily, we see when our we nature. the thus capital numbers So intend it buy to far published. higher see things as equipment to and capital see we that in as areas have least of inflation, we we

So as constantly we're project. we come see in, evaluating those each prices

prioritized. We them have

know relatively see We that be projects deferring our Andrew? make do are to of then certainly to Does have intend sense with are We But the them deferring like year what other They it's years. are we'd some minimal. we rest would risks those you, to and goes. far, we ranked. And the those the so do, associated opportunities. to been that into but how We'll date. projects and

Andrew Weisel

Overall... Thank does. for that. you Yes. explaining It

Rich Kinzley

just that the capital one -- that in. do and add year's this And majority we the of majority contracted have vast to other thing is to locked

if in us would is in come We detail beyond to our our those that quarter this add inflationary years. increase I on $XX November. to situation the release to later think well. So our help or capital that's helpful us CapEx well thing that is early numbers capital million likely with forecast usually update as about other you One More as make third year.

Andrew Weisel

you. Thank Great.

Next up demand. I a see question year-over-year. volumes are that overall electric quite bit on gas and

Are peak the for pre-pandemic ideally customer well in-migration to population some winter class? talk how as loads. you and by weather mentioned levels, about new adjusted You compares demand to as the able

Linn Evans

at certainly that we'll in be There'll data looking QX we're file Yes, that each No. our other.

I residential, it remains think strong. the that in certainly

load. probably we're you think my As the residential up. in the know, C&I And actually and to I've We're least back correctly at load, now been that. it's the pre-pandemic C&I load levels, if yes, the still during pandemic I was a think seeing seeing exceeded looking at... it's And numbers memory I is

Andrew Weisel

the Yes. one, if Is I that last you. about you conversations the be? bit interest wrong Can having be Great that could detail programs more believe to hear. a little just RNG be that, may. or how a these talk voluntary please? big right? would I for on programs Just customers, might regulators with could little One I new be you

Linn Evans

they -- us, That's new you are Yes. it Andrew, said. is -- for as

be for will. rural businesses, they need of are demand and their communities. lot you there's We some a of for and them agrarian they'd oriented, within understand We sustainability within lot and primarily the serve new, them. communities good communities if serve yes, own a own agrarian of their very territory. So our Many

that produces pad excited it. a Midwest our So RNG future and territory. about element opportunities it we're it for portfolio. through kind nice of think launching us And little We pretty glides has to our

Andrew Weisel

much. so Very good, thank you

Linn Evans

Andrew. you, Thank

Operator

turn I back further to Linn for Evans will remarks. call no the closing questions, With

Linn Evans

success thank American help forward interest Thank the towards much already in morning. Hills. in your thank you, you assure your a weeks can Gas Association Conference. seeing this Black you, Well, many quarter. you I at Financial And we're you for everyone. look second continued to Liz, We at the few for work of very in

Operator

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

Have now You disconnect. day. a may good

Black Hills (BKH) 5 May 222022 Q1 Earnings call transcript