- Earnings call transcript Q3 2022

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Operator

Good day, ladies and gentlemen, and welcome to the Black Hills Corporation's Third Quarter 2022 Earnings Conference Call. My name is Liz, and I will be your coordinator for today. At this time, all participants are in a listen-only mode.

Following the prepared remarks, there will be a question-and-answer session. [Operator Instructions].

conference recorded this replay reminder, a is for being purposes. As the now to like would presentation to I turn over Mr. Jerome Nichols, Corporation. Black of Director of Investor Relations Hills sir. proceed Please

Jerome Nichols

Thank Hills to earnings you, everyone. call. third conference quarter XXXX and Black morning, good Corporation's Welcome

materials You this our www.blackhillscorp.com, the morning release heading. at call Investor website for Relations can our earnings find under our and at

of for Financial start earnings we our prior and and is Hollywood, will Vice be President, leadership begin Evans, Black that Rich Hills Linn Leading in be will in Chief the Officer; today, Vice Kimberly President Before Nooney, meetings to XX Senior Also conference. the investor we Conference morning EEI posted note and Florida. website President November our would Materials discussion today like Treasurer. this to Controller our starting Kinzley, Executive Corporate Financial attending on quarterly and Chief Officer. are attendance the

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

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

Linn Evans

everyone, this and Hello, you thank you, us for morning. Thank joining Jerome.

to last We news to with retire and pleased mid-year Kimberly Rich attempt notice me Rich release this that issued morning. As announcing provided his has Jerome XXXX. of noted, I'm a week have

course, now has to this and wish will our to for will enjoy of I date, family great his the company contributions his he in pleasure exemplary to retirement the our to their take celebrating friend at Corporate proven become She his Rich Rich April next who future you missed. to many already be be opportunity chapter. our introduce year, and very current he have well. early best Rich a know to want a X a and but We ensure transition. and thank next partner of Vice Treasurer, with and CFO and the will work And to Kimberly, next Controller of closely will she in several months over President, smooth continue I

know terrific forward look Black the delivering and and a For deep skills she of the to Kimberly you brings strategy experience continue past with working leader been executing leadership already Kimberly, our passionate has to within CFO value. role. to years, that those Hills and shareholder for she XX I

by I'll investor year. same September, throughout our again the X% strong the note comments XXXX solid my team of of once our Through I'm for this Slide the operation annual per of X%, execution at has very we year. years start consecutive financial to On completes XXXX, X. pleased in team's billion major compared served and our the peak last during the the quarter. for Moving the four team a year with on I'm temperatures performance customer were increases, to growth. very dividend $X.X period to the increased continued to presentation. electric availability pleased we share XXXX earnings with $X.XX earnings our total $X that's driven per a initiated and year guidance the I Yesterday, by outstanding and accomplished the to we XX of We $XXX and what which fleet in and quarter increased extremely our successfully capital our summer all-time great hot guidance three regulatory loads without our performance performance, of solid forecast third of affirmed operations for generation range generation during our execution, new million outage. side, share. strategy We by XXXX earnings

was noted I consecutive ninth that This Wyoming Dakota demand our the strong customer both last benefiting through new that customers' reliably excess South sharing our the sales As and served quarter, arrangements systems peak our this profitability. by shareholders fleet of summer and enabled throughout our also system loads. customers performance bills year, and excellent all-time electric off energy our quarter enhance reduce and generation

our transmission We of excited about make our project we're Wyoming XXX continue Southeastern to excellent progress Ready in regulatory expansion strategies the and mile approval on Wyoming.

migration experience expect our territories population trend We continue continue. service this and to into to

XX% recent seven X, example, final City projected next progress and for experienced approval regulatory our population a an growth within with the XXXX plans. years, population revenue XX% annual Slide continued of our XXXX. settlement, outlined study for acceleration effective October partial with we a the Rapid since Arkansas new million we above $X.X growth On between XX. rate of after representing review In rates received new we reaching As

approval our and former replaced rider comprehensive three received and for consolidated riders. also new that We integrity safety and

managed reviews slide constructive In our completed the We're and by intrastate during year, operate $XXX the advanced for Natural we also have team how recovered all also utilities Gas, new we in is recovery provided note core last requests we rate quarter of eight cost in made course simultaneously. in review Once ago. for recovery recently we review, us our all five rate seeking incremental costs region of you made recovery how of business in of we regulatory achieve multiple million Uri a Cheyenne results Slide for the October, This costs. since has customers in a this Rocky slide, excluding outlined we At of of Wyoming to back, of see detail regulatory we ability than quarter Wyoming note We're rate and we as multiple last of incurred ago. this step other sets dockets XXXX million states, to jurisdiction pipeline slide, X. years review carrying new we utilities. mile forth we Colorado. normal as We in recover states our requesting investments rate note Dakota electric for the Taking a and finalized investments rates winter review. filed years demonstrated over our recovering have our XXX South storm as Uri. $XXX costs of for our since I a first $XXX this rate eight again, electric and our successfully incremental by our the in we've bottom incurred our states. you'll strength. recovery I On and for customers million our winter expected team storm our more are plans That on the Mountain

Turning to to from X. a Slide Ready XXX we Service mile electric received Wyoming, approval project. pleased for expansion that We're a transmission the very CPCN bench Public construct the Commission Wyoming

comprehensive customer access will reduction have to rich out our expand gas our of expanded expect our resilient, service future generation Wyoming. We facilitate at cleaner customers effective, start and state renewable Slide and transmission strategic to systems. Sustainability In year, strategies X electric renewable goals. development resources, reduce for This lays and next wind utility emissions XXXX. natural our further for we we highlights solar which to across XXXX published and emissions on and energy ESG August, will and enable a growth, project cost the provide the construction customers. It also in our line achievements to later Report, expect and

provided and ESG Natural also disclosures, for key AGA/EEI Gas the We the Initiative. SASB, Sustainability our updates other including templates,

natural progress our greenhouse time, targets gas one-third We've through lines. made TCFD baseline intensity mains service gas for and tangible of our we our For on emissions our XXXX, the published utilities first electric XXXX by disclosures. also reducing and

announced stakeholders net to Overall, and our are delivering gas could by advance, reduction XXXX. emissions upon. zero of this XXXX see long-term. a be our real new target to total distribution also achievable XX% to not doubled do targets previous customers by of natural over producing the but with a and approach based Should our advancements for resilient which technologies on aggressive current our We realized. target safe require the effective, depend system, upside targets technology emissions are the serving we cost results while our current technology we integrity as our energy see Meanwhile, responsible transparency. and We

approval Plan, XXXX for reduction X, we the schedule Moving out Energy which to baseline. gas our Clean to Colorado potential off XX% by in path XXXX, of procedural to in Slide intensity again emissions in our work continue greenhouse a through of Colorado, sets

XXXX. by would state's clean the Our Colorado's plan of opts energy in stated exceed goal XX% and legislation to

XXXX Our battery megawatts between solar plan megawatts and XX proposes to add wind and XXXX. and of XXX of resources storage

resources Colorado legislation from process to We renewable clean additions. expect competitive the provides and electricity coming result initiate new these our customers' new would in by ownership energy up resources. XX% almost These of to for company of XX% additions Colorado bidding XXXX these

Dakota, Colorado resources to Generating include competitive ability In generation renewable battery storage, dispatchable our process. a add will could of our of megawatts next resources XX assets Importantly, only of Pueblo add at XXX South intermittent which territory we're renewable because our our natural Station. located to fire to megawatts steps and evaluating happen gas likely bidding

gas natural megawatt XXXX XX certainly transmission facilities efficient. Neil plan the And at and a its to Simpson life but fleet last, end to our Our least, and technology coal-fired our new opportunities. engineered at also our of research we more have and legacy reduce generation plants make in emissions supporting generation at proposes of power evaluating additional we're converting not

experiment hydrogen of in and have Energy to a to clean blending University add resources. total megawatts generation We XXX for of we in the study Ohio. Wyoming coal fire natural cooperation an Authority In our with by hydrogen energy with gas XXXX, fuel plan ongoing new the

investments upside Wyoming summarizes it expect to customers, operate new optionality disciplined our base XX increased growth investment should capital and with also and of total year-end. enhanced emissions with investment and by to technology targets we largest in addition new $XXX expand Other and which Ready include including achieved. customer-focused resource be remains support plan; $X.X by opportunities Slide advancements our customer, the system growth and and see total recently billion we forecast attract in transmission of large million in our in be capital track potential for the other in increase for plan could on announced our transmission occurring energy projects to our blockchain clean We five-year XXXX. to service capital a

better efficiency also We're initiative. serve forward our think We cultivating data also effectiveness can more in about and growth about and We're day. as mindset our every our a a center improving identify energy customers remain through hyperscale how Cheyenne. excited continued holistically team we to

Moving mentions performance for to to year. financial turn recent Rich I for our to I'm over excellent call before brag his just this update, Slide time operational XX one Slide more the team XX, few accomplishments. a of our going on

on First, is on safety a daily focus in our our basis. embedded culture

Governor's in the South with was Meritorious recognized Dakota Award. headquarters Our recently

of EEI do. talented again, coworkers results. thank On the in listening note in today, right for all utilities side electric three quartile. our were the you'll system all focus reliability in we you my XXXX the on Once excellence top of your slide, the Through

choice the and the and financial Thank stakeholders. us engaged providing our with at you positive and I'll Rich delivering energy all service, comments you over my our speared partner our workplace. tip You're for experience culture update. great it completes and a what That safe of to of to of reliable the our our turn do make for advancing customers for

Rich Kinzley

the she kind and good CFO. retirement thank your forward to about look And with will Thanks, and company everyone. Kimberly a the good. for appointment and I'm my you things assisting words transition and the the and next to her morning, Kimberly Very excited Linn, as accomplish. for I Linn great

As the three Linn strong performance first of had we've quarters through noted, the year.

both is Year-to-date, help operations. start quarter, shows more team increase EPS will understand our XXXX. was for our which With operate reports been emphasis have better Slide see in which these our variances customers which have earnings on you we in of will shareholders. on trying by explain and year-to-date last in operating income. results, segment long-term long-term sustaining compared EPS reminder, an on in we same more on a every weather, focused said, and we'll our seasonal QX to and $X.XX future $X.XX utilities, results focus in exceptional $X.XX XX, I'll year-to-date the we to investors $X.XX earnings EPS to driven of during versus value years. Rather Since gas that electric quarterly. As X%. delivered year benefits variations XXXX, than recent for dramatic period compared an

impacts rates more and our offset Our inflation of the solid execution year-to-date. than strategy on interest

our for quarter, experienced peak utilities the During electric our peak we third utilities. season gas for and our cooling irrigation demand

are While and rider a the for hot XX was dry the recovery. rates XX were weather year, quarter detailed new and dominant illustrate change the earnings drivers tailwind of the and All in and drivers earnings in Slides yesterday our net income third available our the quarter after-tax in year-over-year amounts detail more release later today. filed and be for and to XX-Q year-to-date. with distributed

bump our margin a normal EPS benefit $X.XX $X.XX this year, to the to margins of For quarter, electric benefit provided for XX, EPS from new higher gain Slide weather. summer utilities provided irrigation $X.XX Gross utilities EPS were rates the quarter benefits recovery by in due hot the EPS provided mark-to-market and and $X.XX electric third prior to of solid year's year compared favorability. dry to rider on days and third XX% tempered up loads a weather Cooling were at compared the for quarter, and and of compared in gas margin. gas gross both benefits of were degree of weather last

As interest lower primarily Wygen higher outside X interest margins bad short-term balances that by increased a rates this as expenses. O&M driven higher were services, due result higher to higher contract increased the higher debt. reminder, vehicle higher of Depreciation due was to on electric was of allowances January negatively impacted commenced revenues fuel re-pricing debt year. X short-term capital and investment and by new and expense the a

Colorado, from growth, operating XX. and recovery, year-over-year and gas drivers utilities. our benefited and rates. more higher rider income on Wygen at Through weather, Iowa, Gross benefited gas Slide Kansas, new regulatory and than our rates increased to net expenses, X favorable year-to-date to margins in contract higher lower pricing recovery Moving year-to-date September offset million. customer interest across which and from XX% utilities $XXX Earnings electric

higher Slide storm last In one-time September a positive this detail winter Uri the weather recovery. quarter services, adjustments interest driven to a year compared adjustments, costs. expense computing to costs DD&A and experienced were O&M impacts primarily of investment quarterly addition, winter mark-to-market weather, we $X.XX year. and the of last to Appendix capital by year-to-date and higher outside EPS increased storm related fuel due our in Mark-to-market by of Through Year-to-date, to normal Uri. balances and $X.XX true-up higher provides due cloud was and vehicle rates. benefited program $X.XX EPS. increased XX debt compared higher interest to

this Appendix. XXXX. these our our initiated with emphasize in fourth discipline Our our challenge our X% of More the and outlook earnings in XXXX on solid the long-term about year constraints growth customers. per remain to for chain long-term We range a manage while $X rising to been able business target results. market want near-term based impacts supply I XXXX confident rates, EPS to in XX. our found details over future, We can recognizing and impact interest quarter challenge about EPS earnings reaffirmed macroeconomic of full-year the the to inflation broader Slide share, on assumptions represent the X% while pose optimistic of XXXX. is be We've factors on and for we financial our We range remain us a guidance largely that growth to We reflects which earnings results. $X.XX of guidance listed focus. $X.XX in recognizing $X.XX a financial mitigate year-to-date and

customer we on solid the growth plan and strong developing grade XXXX near-term, drivers in in ratings investment a be in opportunities to to five-year capital limiting to commitment runway our XXXX to and and pressures. of our In beyond. deliver are have We credit investment bill sensitive

XXXX credit in and position continued we to financial long-term Linn, shows through our financial of our capital Slide billion capital our was million of X% This through our increased ratings, or the reflects investment $XXX plan. XXXX XXXX structure, capital largely flexibility. by As lens through plan XX $X.X increase for XXXX. refinement and

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

compared year-end gas XXXX. total of at Our XX.X% $XX high program of recently through XXXX, our year-to-date debt debt ratio winter we XX% from to our end million costs of equity we've XXXX. million Also, lower flows of storm issued XXXX end as debt. the to costs issuance was to assumes will Uri operations, natural short-term a through of to and use total ATM recovery $XXX Cash year-end capitalization by recovery incurred at flows help the drive those for and guidance quarter XXXX $XXX million and equity additional cash repay ratio

actions, late This of to early our temporary credit XXXX. cost to and sheet our these Fitch's affirmation strength. With XXXX of nature our recent by mid-XXs achieve the capital the recovery BBB+ balance expect reflected we in restore progress on impact storm was or Uri targeted recognizing structure the of rating,

Given about current we're volatility, Slide conditions being strengthen our very needs. and XX market balance alternatives thoughtful our business. to out growing exploring lays equity are we and sheet our fund

fund utilities, minority in five-year evaluating As could we planned our our are potentially example, investment needs an equity our plan. a gas through current interest which

and assumptions. ATM effective place, be current our is for is tool which the to proven have earnings also recent our in We an basis years in guidance

an to provide should update announce. will something we have publicly We

displayed by increase years, the in Slide over our average. a on The quarterly five is last dividend X% XX. annually Board and X% dividend rate, on our Our recently dividend approved increased we've

long-term quite we're dividend dividend XX second industry growth. record increases, track our years of and XXXX on sustainable longest proud our Our of, the record consecutive focus represents illustrating a in

XX% XXXX, payout take by target. annually happy we we'll that, X% than forward, be to our And we your questions. through maintain more XX% dividend with Looking as increasing anticipate our to

Operator

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

Bank Your comes first of with Zimbardo question from America. Paul

Paul Zimbardo

left equity XXXX type just the full-year given to-date transaction. and side, XXXX, it on issued where a of the up you kind a Following off block of implies more in the guidance equity you've for

Just have see wanted you that next of to if defer message or kind into the to do some year? flexibility that's sending you're

Linn Evans

a of that within the say ATM of that I'd do trading the kind we Certainly, think get a could can done the end through but we block's to. it's And dribble, year, need that enough combination work there's if Paul, a days level if we attractive, we And of next to Well, not that. going that the of it's world, bleeds little into if it ATM. certainly, this we're year. to all

Paul Zimbardo

is that probably Understood. caterer then high-end a that above we XXXX/XXXX? going Should get growth reaffirmed it's XXXX towards Okay. to more that back And use trajectory. implies multi-year more improvement you back-end the you that or meaningful XXXX to the like if as it is think you to weighted base, meaningful having about the

Linn Evans

insightful that's question. and you the thank for Paul, very Yes.

toward our et growth. If and in gave that's around XXXX, off how X% you XXXX why that impacted we for opportunity we'd some by how next of by you we XXXX, be rates, X% look of guidance at CAGR impacted earnings assumptions high-end we year, be through the in the inflation, we we've got could And be growth to our did of interest agree we data cetera. would our

growth lot was of our part, see of focused And kind year-over-year. on you course, of initiatives. a kind O&M large flat for that the In fact, of can we're

initiatives, I we our base plan but as hyperscale our in examples, migration that cost indicating outer perhaps gets as of lower the control, by the range, relationships, of higher that XXXX efforts you're cetera, you're spot customer to years. of our toward low around on off regulatory us think range, centers -- rate those growth, growth focus end into growth -- at data the look of Our on be we'll in that our et the end

Paul Zimbardo

that that strategic that transaction to kind I I Okay. guidance, of financing of the a outside would just quick you Uri? then Excellent. contemplating say And is heard think the not be clarify,

Linn Evans

not our correct, in guidance. that Paul, are You that does contemplate

Paul Zimbardo

you. soon. all you Excellent. Okay. See Thank

Linn Evans

Thank you, Paul.

Rich Kinzley

you, Paul. Thank

Operator

next from Brandon comes Your with question Lee Mizuho.

open. now is line Your

Brandon Lee

Rich. Hey, Linn. Hey,

all Just quick you look would need commissions for gas what the question partner, states? the by the investment the process on a all regulatory approval in the that? Would like approval potential from

Linn Evans

any and The investor would Good you not thank regulatory is question. Brandon, morning, We Good be approvals. potential short answer that looking no. that question. a at for would require

Brandon Lee

Got all had. lot. That's Okay. a Thanks it. I

Linn Evans

you. Thank

Operator

Instructions]. [Operator

with from next Your Brian question comes Sidoti. Russo

Your line is open. now

Brian Russo

morning. Yes. Hi, good

follow-up on, is is guess cases just to incremental it the of EPS a recover is rider something for? towards I Just EPS by the the that recovered mechanisms driven in $XXX for? follow-up XXXX on CAGR CapEx, file that bias And what need million the high-end also a most CapEx the to -- XXXX. is most through that And rate -- of you or up

Rich Kinzley

right? kind Brian. Rich, Certainly in of growth. and CapEx to the to of going Yes, a XXXX combination it's this combination -- It's rider be XXXX is of and it's that. bulky So XXXX is all earnings, helpful a

showed Some you rate totals. disclosures you different the to we our review require of some breakout activity. of that will CapEx how And the in can terms it see in

hopefully So answers question. your that

Linn Evans

And Rich job Brian, and answering. is nice Linn is Rich -- this

just that our are. I organization. ongoing and capital again, clarity fill think of our our gain exercise function we opportunities shows a into respect that and within That's it to what insight with opportunities out good once as

Operator

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

Linn Evans

for EEI enjoy further. to other again, thanks appreciate I or your the look questions, you, Hills. XX everyone. your of in thank about seeing and X days interest in-person and a We'll certainly us. think Take visiting forward your look We in seeing Conference. in time, to safe please Black day. your Financial you, at interest Well, productive forward and many We'll each care. But And

Operator

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

disconnect. now good Have a day. may You

Black Hills (BKH) 3 Nov 222022 Q3 Earnings call transcript